LINCOLN, Neb. (DTN) -- The once-promising ClearFlame Engine Technologies ethanol/diesel company is moving toward bankruptcy and its chief executive officer and co-founder has left the company which faces allegations it discriminated against a now-former engineer for the company.

ClearFlame's development of its technology that allows diesel engines to burn on ethanol had been progressing significantly since it launched when the company's CEO and co-founder BJ Johnson introduced the idea at the National Ethanol Conference in 2020.

Despite all of that, DTN learned ClearFlame may be continuing to operate under new ownership.

Former ClearFlame engineer Michael Klagian filed a lawsuit in November 2024, alleging the company discriminated against him based on his age and reported disability.

Klagian was terminated by ClearFlame on Aug. 15, 2023, according to his lawsuit filed in the U.S. District Court for the District of Northern Illinois.

Klagian was one of 23 ClearFlame employees fired as part of what the company told the court was a reduction in force.

As of March 25, 2025, the Illinois secretary of state listed ClearFlame as a company "not good standing."

ClearFlame said in a motion to dismiss the lawsuit on May 20, 2025, that it was moving toward liquidating the company's assets.

Klagian said in his lawsuit that he received a letter from ClearFlame on March 26, 2025, entitled "notice of assignment for the benefit of creditors."

That letter read in part, "Please be advised that declining business prospects prompted ClearFlame Engines, Inc. ('assignor'), a Delaware corporation ... to execute a general assignment for the benefit of creditors on Feb. 26, 2025, in favor of ClearFlame Technologies ABC, LLC.

"Pursuant to the assignment, ownership of all of assignor's assets, both tangible and intangible, transferred to assignee. As of the assignment date, assignee has begun the process of liquidating the assets, terminating assignor's commercial operations and otherwise winding down assignor's affairs."

DTN has been unable to find out if ClearFlame has filed for bankruptcy protection.

DTN's attempts to reach BJ Johnson or any other company official were unsuccessful. Johnson's name and photo were removed from ClearFlame's website which still lists the same information for company Chief Technology Officer and co-founder Julie Blumreiter. The company's email listed for media inquiries is no longer functioning.

On his LinkedIn page, it says Johnson has been a private energy consultant for the past eight months based in Hinsdale, Illinois. On her LinkedIn page, Blumreiter is still listed as the CTO for ClearFlame.

Some real heavyweight companies put their support behind the company based in Illinois, including Bill Gates-operated Breakthrough Energy Ventures, John Deere, Reviva, Vander Haag's Inc., commodity trader Mercuria, Cummins Inc. and many others.

DISCRIMINATION ALLEGATIONS

In an amended complaint filed against ClearFlame, Klagian alleges he was fired based on his "disability" and age that is reported to be older than 40.

"During his employment, Mr. Kalagian was the victim of direct comments regarding both age and disability," the lawsuit alleges.

"For example, Mr. Kalagian overheard human resources managers discussing with employees that the defendants' health insurance premiums would be lower if not for 'all of these old sick people' on the payroll. Mr. Kalagian was told that he looked 'much younger' without his beard. A member of leadership, Jeremy Babinet, told employees that he had attended a music concert, but it 'wasn't fun,' because there were so many 'geriatrics,' attending the event. During an 'all-hands meeting' to enroll employees in a new disability benefits plan, Mr. Kalagian asked about how to apply for benefits. Mr. Kalagian never received the information requested; however, plaintiff was terminated shortly thereafter."

Kalagian alleges he was replaced by a "younger, healthier" employee although 22 other employees reportedly were terminated at the time.

The lawsuit said Kalagian had since learned he was "training his own replacement" prior to his termination.

Kalagian asked for a jury trial for what he says were violations of the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Illinois Human Rights Act and Illinois common law.

He is asking the federal court to require ClearFlame to pay lost wages and benefits and to pay damages in an amount "to be proven at trial."

CLEARFLAME POSSIBLY STILL OPERATING

According to an amended lawsuit, it appears that ClearFlame may not yet be out of business.

ClearFlame Technologies ABC, LLC is listed on the Illinois secretary of state's website as a domestic limited liability company that was formed on Feb. 24, 2025.

It is to that new company name that ClearFlame transferred its assets, according to court documents.

The lawsuit said the registered agent for New ClearFlame is listed as Registered Agent Solutions Inc. in Springfield, Illinois.

The principal address for New ClearFlame is listed as in Boston and the company's managers are listed as G2 Capital Advisors LLC and G2 Management LLC, also in Boston, according to the lawsuit.

G2 Capital Advisors, LLC is a Massachusetts limited liability company with Jeffrey Unger listed as its manager on the Massachusetts secretary of state's website.

"Upon information and belief, New ClearFlame is the successor in interest to ClearFlame, continuing the same or substantially similar business operations and business activities, and employing the same or similar management, employees and resources," the lawsuit said.

Unger, G2's founder and CEO, did not respond to DTN's request for comment.

Kalagian's attorneys said in the lawsuit they believe ClearFlame continues to operate its business.

"Upon information and belief, New ClearFlame operates the same core business, with continuity in management, resources and client relationships," the lawsuit said.

"This transaction occurred in close temporal proximity to plaintiff's termination and appears to have been designed, in part, to limit exposure to liability arising from the claims in this action. Accordingly, New ClearFlame is a proper party to this lawsuit under principles of successor liability."

In answer to the amended complaint, ClearFlame said it "admits only" that ClearFlame Technologies ABC is listed on the Illinois secretary of state website. "Defendant denies the remaining allegations and legal conclusions" in that section of the amended lawsuit.

INVESTOR SUPPORT

In October 2020, ClearFlame announced the technology delivered 500 horsepower and more than 2,500 foot-pounds of torque, "while eliminating the need for additional aftertreatment such as selective catalytic reduction or diesel particulate filter systems."

During the 2020 National Ethanol Conference, Johnson told ethanol industry representatives the technology has the potential to create a large market for ethanol. He said even an optimistic 20% market penetration into the $231 billion heavy-duty diesel market would create 15 billion gallons of demand for ethanol per year.

In October 2021, ClearFlame announced John Deere was among several companies investing $17 million in the startup company developing a heavy-duty truck engine able to run on straight ethanol.

The funding was expected to enable commercialization of the company's engine technology for the long-haul trucking, agriculture and power generation sectors. The financing was led by Breakthrough Energy Ventures with participation from John Deere, commodity trader Mercuria and Clean Energy Ventures.

In March 2023, ClearFlame announced it had secured $30 million in investments from two repeat investors -- Mercuria Energy Group and Breakthrough Energy Ventures. The companies originally were part of a 2021 $17 million investment round secured by ClearFlame.

Read more on DTN:

-- "Deere Invests in Ethanol Diesel Engine," https://www.dtnpf.com/…

-- "Company Advances Ethanol Diesel Engine," https://www.dtnpf.com/…

-- "CEO of Ethanol-Diesel Engine Tech Company ClearFlame Sets Sights on Ag Equipment, Portable Generator Markets," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com.

Follow him on social platform X @DTNeeley

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