American ethanol maker goes bankrupt due to low demand.

Aventine Renewable Energy Holdings Inc., a U.S. based corn ethanol producer, filed for Chapter 11 bankruptcy in the District of Delaware on Wednesday due to shrinking profit margins.

The Pekin, Illinois-based company said ethanol production operations will continue "uninterrupted," because it has a debtor-in-possession term loan totaling $30 million. Aventine listed assets of $799 million with $491 million in debt.

"We are also a company that is challenged by the difficult market environment for ethanol producers, " said Ron Miller, the Chief Executive officer of the company who also added that "the ethanol industry has sound long-term prospects," and anticipated a "strong rebound as the government imposed biofuels mandate continues to increase and the supply of excess RINS are consumed. "

Aventine went public in 2006. Last month the company warned that it was likely to file for bankruptcy if it didn't get enough cash.

Corn ethanol is used as a fuel. Its usage was boosted a few years ago when government regulations encouraged companies to lower their dependence oil.