Solyndra LLC, the failed solar-panel maker, won preliminary court approval of a $3.5 million settlement with former workers on the anniversary of its bankruptcy filing.
U.S. Bankruptcy Judge Mary Walrath granted tentative approval of the settlement and set a hearing for Oct. 17 to consider making the ruling final, according to court documents filed today in Wilmington, Delaware.
Former employees sued Solyndra, which received a $535 million U.S. Energy Department loan guarantee before collapsing, arguing they didn’t get adequate notice when the company fired almost its entire workforce last year.
The settlement resolves allegations that Solyndra violated the Worker Adjustment and Retraining Notification Act, which requires 60 days’ notice of firings, and sets up a $3.5 million fund that will be distributed to the workers two weeks after the accord takes effect.
The settlement was jointly proposed by the ex-employees and Solyndra, which faced as much as $15 million in damages plus attorney’s fees if the workers succeeded, according to court documents. Employees who were fired can opt out of the settlement.
Solyndra, based in Fremont, California, was raided by the U.S. Federal Bureau of Investigation two days after seeking bankruptcy protection. The company listed about $854.1 million in assets and about $867.1 million in debt in court papers filed Oct. 31.
The solar-panel maker’s collapse prompted congressional scrutiny of President Barack Obama, who praised the company during a May 2010 tour of its facilities. It was the first company to receive a loan guarantee under Obama’s stimulus.
The case is In re Solyndra LLC, 11-12799, U.S. Bankruptcy Court, District of Delaware (Wilmington). The workers’ case is Kohlstadt v. Solyndra LLC, 11-53155, also in U.S. Bankruptcy Court, District of Delaware (Wilmington)
To contact the reporter on this story: Michael Bathon in Wilmington at email@example.com