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A123 Systems’ Assets to Be Sold to China’s Wanxiang Group
Bankrupt battery maker A123 Systems received millions in taxpayer dollars to develop its lithium ion batteries. Now the company’s technology could soon be in the hands of a foreign company, and many lawmakers aren’t happy about it.
China’s Wanxiang America Corp. outbid Johnson Controls Inc. to win A123′s assets last week. On Tuesday, U.S. Bankruptcy Judge Kevin Carey approved the sale, The Wall Street Journal reports.
However, Wanxiang still has one more obstacle: The Committee on Foreign Investment in the U.S. (CFIUS) needs to approve the sale. A number of the committee’s members have expressed concerns about the acquisition.
A123 received $250 million in grants from the U.S. Energy Department to develop batteries for electric cars. Unfortunately for A123, the demand for electric cars was still too low, and the company was forced into bankruptcy. In a Chapter 11 bankruptcy, debtor companies often close branches and sell off assets in order to cut costs and repay their creditors.
Johnson Controls, another federally-funded battery maker, initially planned to buy A123′s assets. When the assets went to auction, however, Wanxiang scooped them up with a $256.6 million bid. That’s more than twice Johnson Control’s initial offer.
The deal has received bankruptcy court approval, but there’s still one more hurdle. The sale is subject to review by the CFIUS.
A number of lawmakers, including Senators John Thune and Chuck Grassley, are concerned that A123′s military contracts and tax-payer funded patents will be going to a foreign company. In addition, Michigan’s congressional delegation has voiced concerns about whether A123′s battery technology could be separated from military projects utilizing the technology.
If the deal falls through, A123 may be OK. Johnson Controls has said it would still consider buying the company’s assets if the CFIUS rejects the Wanxiang sale.
Related Resources:
- Call an Atlanta Bankruptcy Lawyer (FindLaw)
- A123 Wins Court Approval to Sell Assets to Wanxiang (Bloomberg)
- Corporate Bankruptcy: What Every Investor Should Know (FindLaw)
- Allen Iverson Faces Foreclosure of Atlanta Mansion (FindLaw’s Atlanta Bankruptcy Law Blog)
2012-12-14 20:01:56
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