You couldn’t make it up. When the banks went ‘belly up’ in the last five years the bad debts were siphoned off into ‘bad’ banks. Now perhaps there are good battery companies and ‘bad’ battery companies, since the parts of A123 the Chinese didn’t buy has changed its operational name to B456 Systems Inc to eliminate confusion between the ‘old’ company and the new.
The now-named B456 is continuing to battle through the bankruptcy court, while A123 LLC is successfully operating under the ownership of Wanxiang America.
B456 has reached a settlement with Fisker Automotive in which it reduced its claims by 89% to US$15million. The amount owed for breeching warranty claims and damages caused to Fisker by the bankruptcy of B456 were disputed by the battery maker and an agreement that does not favour Fisker was reached.
Fisker sought US$140 million in damages on the grounds that B456 could not meet contractual supply agreements and breach of warranty claim.
However, after analysis by the creditors committee the reduced claim amount was settled on to reflect the breach of warranty only, the breach of contractual supply agreement claim was rejected by the bankruptcy court as unreasonable for B456 to pay.
This spells bad news for the struggling automotive company that has not produced a car since last summer.
The court is similarly considering disallowing US$36million in claims made by Daimler AG and Smith Electric Vehicles. The creditor’s committee that represents B456 has disputed claims from the former customers; its representative lawyer has said they are invalid and should be dismissed. The presiding judge has been requested to reject them.
Daimler is attempting to claim damages in excess of US$25million for rejecting the supply contract after filing for bankruptcy in October 2012. Smith Electric has filed for US$10.1 million because it claims to have been supplied defective batteries.
The DoE gave A123 US$250 million to build a plant in Michigan, it had used about US$132 million of this but, through Chapter11 bankruptcy, this is protected; Meaning the US government will not benefit from the sale of the assets.
Creditors are voting to agree on a liquidation plan to divide proceeds of the sale of A123 to Wanxiang Corporation for US$256.6 million.