Embattled solar-panel maker Solyndra LLC reached a deal to ward off a threat to its cash flow and Tuesday won bankruptcy-court approval to keep spending, at least until Nov. 19.
Embattled solar-panel maker Solyndra LLC reached a deal to ward off a
threat to its cash flow and Tuesday won bankruptcy-court approval to keep
spending, at least until Nov. 19.
Judge Mary Walrath indicated she would sign off on an order granting final
approval to a $4 million bankruptcy loan, an order that is free of claims by
federal lenders on lawsuits that may represent the sole hope of recovery for
unsecured creditors in the case. Additionally, she granted Solyndra permission
to use its cash, without having to trade off rights to collect on lawsuits that
could be the sole hope of recovery for trade suppliers and former workers.
The U.S. Department of Energy had been demanding a lien on avoidance actions,
lawsuits that seek to even out the damage done by a company's collapse into
bankruptcy. The orders Walrath will sign once they are in final forms don't
grant liens on the lawsuits.
The DOE is one of Solyndra's largest creditors, with a $527 million loan on the
line in the bankruptcy.
Solyndra is the target of congressional probes aimed at unearthing evidence of
political taint on the DOE loan. The investigation has complicated the Chapter
11 proceeding, which is a race to an auction by a shuttered company operating
on a shoestring budget.
Having never turned a profit, Solyndra filed for Chapter 11 protection in
September, when months of negotiations with lenders, including the DOE, fell
through.
The Federal Bureau of Investigation raided the company's offices shortly
thereafter. As a result, Solyndra has had problems getting banks to handle its
accounts, company attorney Debra Grassgreen said at Tuesday's hearing in the
U.S. Bankruptcy Court in Wilmington, Del.
The law firm will hold cash earmarked for bankruptcy professional fees, said
Grassgreen, who is with Pachulski Stang Ziehl & Jones.
The federal loan is secured by Solyndra's assets, which are headed to a
bankruptcy auction. However, there are competing senior loans to be paid as
well from proceeds of the sale of the assets.
According to court papers, Solyndra has $783 million in secured loans to cover,
including the DOE loan.
Unsecured creditors, including more than 1,000 workers who lost their jobs when
Solyndra was forced to shut down, are on the bottom rung in the bankruptcy
payment-priority scheme. The DOE loan was supposed to support job creation in
the alternative-energy industry.
Most worker claims are requests for damages due to Solyndra's failure to abide
by federal laws that require advance notice of mass layoffs.
Additionally, trade creditors that supplied the fledgling company are in the
ranks of the unsecured. All told, there is an estimated $40 million worth of
unsecured debt that isn't likely to be paid, court papers filed in Solyndra's
case said.
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