Green energy funding was a major talking point in the first presidential debate earlier this month. A particularly critical topic, GOP candidate Mitt Romney criticized the Obama administration for excessive subsidies on green start-up companies including Solyndra, Fisker, and Tesla. Romney jabbed, "You don't just pick the winners and losers; you pick the losers."
Reacting to the criticism, both Tesla and Fisker were quick to respond. In fact, Tesla even vowed to deliver positive cashflow before year-end.
Unfortunately, not all start-ups are made the same. A123 Systems Inc. filed for Chapter 11 Bankruptcy Protection after the company failed to make a debt payment due yesterday. A123 Systems, a lithium-ion battery manufacturer that supplies components to vehicles including the Fisker Karma EV and a propused Chevy Spark EV, received a $249 million federal grant from the government in 2009 to build a factory in the United States. As of August 31, 2012, the company possessed $459.8 million in assets and a whopping $376 million in liabilities. The company had announced yesterday that it had expected to fail paying for an interest payment on a $143.9 million loan expiring 2016.
Only the latest in a series of financial obstacles plaguing A123 Systems, the company has endured a number of challenges including a major battery recall after an investigation launched by Fisker Automotive identified a fire hazard caused by a manufacturing defect in the A123 battery cell.
Addressing the Chapter 11 filing, A123 Systems stated in a press release, "This action is expected to allow the company to provide for an orderly sale of the automotive business assets and all other assets and business units."
Opening doors to corporate suitors, the press release also announced plans from Johnson Controls Inc. to acquire automotive business assets from A123 Systems at $125 million. What's more, Johnson may even provide $72.5 million in financing to allow A123 to continue its daily operations.
A high-profile failure in the green energy industry, the bankruptcy of A123 systems will no doubt be used aggressively against President Barack Obama in this evening's presidential debate as Mitt Romney further defends his position to eliminate all green-energy subsidies.
To learn more about how A123's bankruptcy affects the future of the green-tech industry, be sure to watch the second 2012 Presidential Debate tonight, October 16th, at 9:30 p.m. Find out where you can watch the live-streaming of the debate here.
