Despite objections from corn farmers and lenders concerned supplier trust will be lost, a federal judge in Delaware has ruled VeraSun can renege on its recent corn contracts for ethanol plants in Janesville and Welcome.

The bankruptcy judge’s ruling also allows the Sioux Falls-based company to decide within 10 days whether to cancel future contracts. Farmers are concerned the company will require deliveries on lower priced contracts and reject contracts at higher prices.

VeraSun, which filed for bankruptcy protection on Oct. 31, asked the court for permission to reject its October, November and December corn contracts for its new ethanol plants in Janesville and Welcome. That left dozens of farmers in Minnesota and Iowa, as well as other states where the company has ethanol plants, wondering what to do with corn they thought had been sold.

Many of the contracts were negotiated when corn was selling for a much higher price than it is now.

That prompted Donald Quiram, a farmer in Waterville, to file an objection to VeraSun’s request. He also joined more than 100 farmers who filed an objection as a group and hired an attorney to appear at a hearing Tuesday in Delaware.

“I request that these legal contracts be honored in their entirety and, if not, I be compensated for the difference in the price that the contracts were written for and the current local price for the same corn,” Quiram said in his written objection.

Agstar Financial Service also filed an objection to VeraSun’s request to reject contracts, saying the move could make area farmers lose trust in the company. That could make it difficult for the southern Minnesota plants to maintain a corn supply when they are operating, the lender said.

The Janesville plant was scheduled to start operating soon, but its opening was delayed by the bankruptcy filing. About 30 people hired to run the plant were laid off.

“The debtors have offered no evidence that rejecting the Janesville and Welcome corn contracts will be profitable for their creditors, nor have they addressed the potential harm the proposed rejections will inflict on their relationships with their suppliers,” the Agstar filing in bankruptcy court said.

If VeraSun does cancel future contracts, farmers will have 10 business days to object, the judge’s ruling said. If no one objects, the contracts will be considered rejected without a further court order.

Farmers who had been storing corn to honor contracts in coming months, or planning to plant corn for future contracts, are now stuck in “limbo,” according to an objection filed by a group called The Ad Hoc Committee of Corn Suppliers. The group represents more than 100 corn suppliers in seven states.

“This is fundamentally unfair to the corn suppliers who are not getting the benefit of their bargain,” the committee’s objection said. “The proposed rejection procedures create uncertainty and make it difficult (if not impossible) for corn suppliers to mitigate their damages by trying to sell their corn to a third party to cover the lost sale with (VeraSun).”