U.S. Gov Gave A123 Systems $1M Grant the Day It Filed for Bankruptcy
November 19, 2012 10:05 AM
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Republican Senators want to know why the Energy Department continues to fund failing companies
A123 Systems is the provider for the battery packs used in several electric and hybrid vehicles on the U.S. market today, including the Fisker Karma. A123 produces lithium-ion batteries and was the recipient of multiple federal grants from the U.S. government.
A123 Systems filed for
Chapter 11 bankruptcy
protection on October 16 after a deal with a Chinese auto parts company that would have rescued it collapsed.
The same day the company filed for bankruptcy protection, it received a payment of $946,830 from the U.S. government as a part of its $249 million Department of Energy grant for developing clean energy technology.
The grant has an outstanding balance of $115.8 million, and A123 is still eligible for the remainder of its grant funds if it decides to update or expand its manufacturing capacity.
Republican Senators John Thune and Chuck Grassley have been vocal in opposing any federal grant money being giving to A123 and have pressed the Department of Energy to explain why grant money has been continually given to the battery maker even as it has faltered and filed for bankruptcy protection.
A spokesman for the Energy Department, Bill Gibbons, said, "The Energy Department takes its responsibility to be good stewards of the taxpayers' money very seriously."
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RE: Wait a second.
11/19/2012 11:46:36 AM
In the automakers' case, when you have a massive pile of debt such as pensions to pay, bankruptcy makes sense since you can get out of paying back all that debt. It also allows you to reform and continue operating as a business.
A123 wasn't trying to continue operating as a company. For a while it's been looking to sell itself to the highest bidder. Basically their executives were looking to dissolve the company, take their money, and run.
"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
Official: A123 Systems Files for Bankruptcy
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