Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Battery Maker A123 Systems Wins Final Bankruptcy Approval
Author: Joel R. Glucksman
Date: May 31, 2013
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Failed battery maker A123 Systems wins final bankruptcy approval and will be permitted to move forward with its reorganization plan, a U.S. bankruptcy judge ruled.
U.S. Bankruptcy Judge Kevin Carey approved the company’s plan to exit bankruptcy after using the proceeds from its asset sales to repay its creditors. The battery manufacturer, now named B456 Systems, faced several disputes from creditors that inhibited it from formerly emerging from bankruptcy, including a bitter disagreement between its official creditors committee and auto parts maker Johnson Controls Inc., which lost a bid to acquire the company. Instead, the company was sold to Chinese auto parts manufacturer Wanxiang Group Corp. for roughly $257 million.
Following the sale, the creditors committee accused Johnson Controls of trying to undermine the sale after losing the bid. The latter agreed to pay a settlement of $200,000 to A123 Systems’ bankruptcy estate, and the committee agreed to drop future claims against it. The settlement largely paved the way for the former battery maker to emerge from proceedings.
The company is expected to exit bankruptcy in roughly three to four weeks, and representatives said they are “thrilled with the result,” according to Bloomberg. While court documents have not yet disclosed firm financial figures, creditors are expected to recover between 32.7 and 63.6 percent of the amounts they are owed.
After filing for protection, the company listed assets of $459.8 million and debt of $376 million, Bloomberg reports. Throughout the auction and bankruptcy process, the company faced a great deal of skepticism for its sale to a foreign entity, particularly after receiving a federal grant of roughly $249.1 million from the U.S. Department of Energy. Wanxiang Group, which is China’s largest auto parts maker, purchased the green company’s automotive, grid, and commercial business assets for $256.6 million.
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