Archer Daniels Midland Co. (ADM) and Valero Energy Corp. (VLO) bid Tuesday on some of VeraSun Energy Corp.'s (VSUNQ) ethanol plants for sale in a bankruptcy auction, according to people familiar with the negotiations.

The auction, which began Monday, continued Tuesday because some of the 17 assets drew multiple bidders, the people said. A hearing to report upon the auction is scheduled in bankruptcy court for Wednesday.

VeraSun filed for Chapter 11 bankruptcy protection in October, after taking on debt to buy rivals. As corn prices skyrocketed in mid-2008, a poorly-executed risk management strategy led VeraSun's costs to mount, rendering the company unable to pay its debt. The company was unable to get enough cash while under bankruptcy protection to keep all its plants in production or to preserve hope of restructuring and emerging from bankruptcy in one piece.

The assets for sale have drawn interest largely due to their low price. A floor bid on the assets from Valero, the largest U.S. oil refiner, offered about 50 cents per gallon of ethanol production capacity, only a quarter of the original construction cost of the plants.

Valero is among the largest ethanol buyers in the U.S. The company bid $280 million for five of VeraSun's plants and the rights to build a sixth plant.

During the course of the auction, the exact plants on which Valero, agribusiness giant ADM, and others are bidding have shifted, the people familiar with the negotiations said. The 17 plants have been put into packages that may be different from the groups that were previously announced, according to one of the people familiar with the bidding.

Both Decatur, Ill.-based ADM and Valero declined to comment.

Demand for corn-based ethanol, which is commonly added to gasoline, soared in 2005 due to a federal mandate. High corn prices in 2008, coupled with weak gasoline demand resulted in slim margins for producers, forcing companies like VeraSun to file for bankruptcy protection.

-By Jessica Resnick-Ault, Dow Jones Newswires; 201-938-4435; jessica.resnick-ault@dowjones.com