Solyndra bankruptcy plan approved over US objections
By Tom Hals, Reuters
October 24, 2012, 12:17 am TWN
WILMINGTON, Delaware--Solyndra, the solar panel maker that failed despite a US$528 million federal loan, on Monday won court approval for its plan to repay creditors and end its politically charged bankruptcy, after a judge overruled objections by the U.S. government.
U.S. Bankruptcy Judge Mary Walrath in Delaware rejected the government argument that the plan was improper because its main purpose was to provide tax breaks.
Venture capital firms Argonaut Private Equity and Madrone Capital Partners will control Solyndra's tax breaks, known as net operating losses or NOLs, that are potentially worth US$341 million after the bankruptcy.
"It is clear in this case the bankruptcy and the reorganization dealt with many other things than the value of the NOLs or the preservation of the NOLs," said Walrath on Monday at a hearing in Wilmington.
Anne Oliver, an Internal Revenue Service lawyer, told the judge that the government may appeal. Walrath granted her request to delay the repayment plan by 10 days.
The plan calls for Argonaut and Madrone to take control of Solyndra's parent company, which will have no employees or operations but hold about US$1 billion of net operating losses.
Argonaut and Madrone plan to use the company as a vehicle to make investments or buy businesses, and apply those losses against potential future profits to reduce tax liabilities.
Ordinary creditors may not fare as well. Despite selling nearly all its assets, Solyndra expects most creditors to recover 3 percent or less of what they are owed, far less than in a typical corporate bankruptcy.
Solyndra's bankruptcy case continued to generate political heat on Monday, just 15 days before U.S. elections.
Rep. Darrell Issa, a California Republican and chairman of the House Oversight and Government Reform Committee, invoked Solyndra in a letter on Monday to Energy Secretary Steven Chu seeking documents relating to Fisker Automotive, maker of the Karma plug-in hybrid car.
Like Solyndra, Fisker received a government loan through a clean energy program. Issa demanded reassurances that the Department of Energy took steps to protect those taxpayer funds.
Solyndra filed for Chapter 11 protection from creditors on Sept. 6, 2011, as it and other solar panel companies were hurt by a flood of cheap imports from China that drove down prices.
The company had received the US$528 million loan as part of a government program to promote clean energy.
Its collapse sparked an 18-month investigation by Republicans who faulted President Barack Obama's administration for failing to cut the government's losses.
Republicans accused the administration of making the loan in part as a favor to George Kaiser, the billionaire founder of Argonaut and a fundraiser for Obama's 2008 presidential campaign.
The White House has called the decision to make the loan "merit-based."