FLOYD -- Midwest farmers are banding together in an attempt to make a ethanol company quit gambling with their money.

VeraSun Energy, based in Souix Falls, S.D., filed Chapter 11 bankruptcy Oct. 31. The move allows the company to decide whether to honor corn delivery contracts, and not inform suppliers until shortly before corn is to be delivered.

A recently formed group called VeraSun Corn Suppliers doesn't think that's right. On Wednesday, the group sponsored a meeting in Floyd detailing possible ramifications of the bankruptcy, to solicit new members and outline legal action it's taking.

About 150 to 200 farmers and grain dealers attended the event at the town's community center. About 40 decided to join the group, now more than 200 strong, officials said, paying $300 each toward legal fees. The group -- corn suppliers from Iowa, Nebraska, South Dakota, North Dakota and Minnesota -- is represented by Joe Peiffer of Cedar Rapids.

VeraSun Corn Suppliers filed an objection in U.S. Bankruptcy Court in Wilmington, Del., where VeraSun filed bankruptcy, asking the court to force the company to say whether it will honor contracts by Dec. 15. The hearing is scheduled for Tuesday.

"Your corn is being held hostage," Peiffer said. "My job next week it to start educating the judge about farm contracts and how that works in Iowa."

Corn delivery contracts are often mutually beneficial for processors and suppliers. The agreements give buyers peace of mind that product will be available at certain times throughout the year and farmers and grain elevators know how much they will be paid for budgeting purposes.

Many suppliers signed delivery contracts with VeraSun during the spring and summer when corn was anywhere from $5 to almost $8 per bushel. As of Wednesday, cash corn at the East Central Iowa Cooperative in Hudson was $3.21 per bushel.

As it stands now, Peiffer said VeraSun can wait until 10 days before the delivery date to see what will be a better deal for the company: The contract price or the going market rate.

Corn suppliers say they're facing a double whammy. Not only could they lose money -- some say hundreds of thousands of dollars are at stake -- but they can't plan for the future. The money they thought was coming in to pay for land, machinery, chemicals and fertilizer for next year's crop may not be there.

Kevin Zwanziger of rural Nashua signed contracts to deliver about 50,000 bushels of corn to VeraSun in December, March, June and July averaging $6.20 per bushel.

At Wednesday's going cash price, he could lose about $150,000 if VeraSun voids the contracts.

"It's going to be tough," Zwanziger said. "I don't know how much money I'll have to pay bills, or if I'll come up short. My cash flow (projections) included these prices."

Hesitant at first to join the group, Zwanziger eventually paid the $300 in an attempt to get some answers from the company.

"It feels like I'm in limbo," he said.

Charles City farmer and state representative Mark Kuhn said his phone has been ringing off the hook from concerned farmers since the bankruptcy filing. Since he and his sons have delivery contracts with VeraSun as well, Kuhn decided to spearhead the group.

Kuhn consulted with fellow legislators and state officials about the best course of action.

"They (VeraSun) should not be able to speculate on our future like they did that led to their bankruptcy," Kuhn said. "It's like VeraSun is flipping a coin: Heads they win, and tails you lose."

VeraSun is Iowa's largest ethanol maker, with 110-million-gallon plants in Charles City, Fort Dodge, Albert City and Hartley. It recently shut down its Dyersville plant. It filed bankruptcy after suffering huge losses when corn costs -- its chief input -- soared this summer, and ethanol prices plummeted.

On Tuesday, the company said it received a "nonbinding indication of interest" to buy the company from an undisclosed party.

Still, Peiffer said there's no guarantee VeraSun or a potential new owner will honor existing contracts.

Given current corn prices, Peiffer doesn't think its likely.

"By Dec. 15, (we hope) VeraSun will have to answer that question," he said. "Lives of farmers in five states are at stake."

If VeraSun chooses to make farmers deliver corn, Peiffer said the company is obligated to pay the agreed upon price. If the company voids contracts, corn suppliers are free to sell to VeraSun at a price designated by the company or market the corn elsewhere.

Some corn suppliers said if contracts aren't honored, VeraSun's reputation will be tarnished. Some indicated they're not sure if they would do business with the company again.

"Why would you?" said Gaylan Brunssen, general manager of AgVantage FS based in Waverly, noting the company could lose big if contracts aren't honored. "The organization has a real challenge with the trust factor."

Contact Matthew Wilde at (319) 291-1579 or matt.wilde@wcfcourier.com.