Oct. 15 (Bloomberg) -- Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt, rebuffed objections to its bankruptcy plan from the U.S. government and urged a court to approve the proposal.
The failed solar-panel maker fired back at the Internal Revenue Service, which claimed the plan can’t be approved because its primary purpose is to avoid taxes, arguing the plan’s focus is to maximize value for creditors, including the government, in a court filing today in U.S. Bankruptcy Court in Wilmington, Delaware.
“While the plan is structured so as to not destroy the existing tax attributes of Holdings, tax avoidance is by no means the principal purpose of the plan,” lawyers for Solyndra said in court papers. “The principal purpose of the plan is to maximize value for creditors -- period.”
Under the bankruptcy plan, Solyndra’s parent, 360 Degree Solar Holdings Inc., will be reorganized while the failed solar-panel maker will be liquidated. Reorganizing the parent would allow it to exit bankruptcy with as much as $975 million in net operating loss carryforwards intact. The carryforwards may generate more than $300 million in tax breaks for 360 Degree’s owners, Argonaut Ventures I LLC and Madrone Partners LP, according to court documents.
The IRS claimed that as far back as December 2010, Argonaut was devising a way to preserve the carryforwards if Solyndra had to seek bankruptcy protection.
The bankruptcy wasn’t filed “to preserve NOLs or to take advantage of some loophole in the Internal Revenue Code, but to wind down a highly technical business with large and complex assets and to address a multitude of creditor claims,” the company’s lawyers said in the court filing.
Under the solar-panel maker’s restructuring plan, the government might get little to nothing for its $528 million claim from the loan guarantee. The government is projected to recoup at most 19 percent on $142.8 million of the loan and probably nothing on the remaining $385 million, according to the disclosure statement. The government was the only creditor group to reject the plan out of those allowed to vote, according to court documents filed today.
Solyndra, based in Fremont, California, was forced to shut down operations and fire most of its 1,100 workers on Aug. 31, 2011. The solar-panel maker listed $854.1 million in assets and $867.1 million in debt in court papers filed Oct. 31.
U.S. Bankruptcy Judge Mary Walrath will listen to the arguments and decide whether to approve or deny Solyndra’s proposal at a hearing scheduled for Oct. 17.
The case is In re Solyndra LLC, 11-12799, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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