Battery maker A123 Systems Inc. seeks bankruptcy protection after weak sales of electric cars. The filing will allow the maker to reorganize their business structure while finalizing the sale of automotive assets. The filing is likely to have the Obama administration face more criticism since the president authorized funding for alternative energy companies. It is said the battery maker received a federal grant from the Department of Energy in 2009 for roughly $250 million, yet the company has only used about $129 million.
The battery maker claims they would be unable to make upcoming debt payments. A123 has sold automotive assets to auto parts maker Johnson Controls Inc. for $125 million. A123 had a deal a few months ago with a Chinese auto parts maker supposedly worth $450 million but the deal didn't go through. A123 had yet to post a profit as Americans have yet to come around on the idea of purchasing an electric car. During the second quarter the company posted an $83 million loss.
The Obama administration has been criticized in the past by republicans for what they feel was wasting stimulus money on green energy solutions. Solyndra LLC that specializes in solar energy is another company that sought bankruptcy protection previously. When A123 obtained federal funds they set up their manufacturing operations near the suburbs of Detroit, MI.
Johnson Controls is said to have loaned A123 about $72 million to help them stay afloat during the bankruptcy. A123 has outstanding liabilities of $376 million with assets just over $459 million.