IRS says ‘tax avoidance’ at heart of Solyndra bankruptcy plan

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How much security would this boondoggle have paid for?'
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IRS says ‘tax avoidance’ at heart of Solyndra bankruptcy plan
By Jim McElhatton-The Washington Times Wednesday, October 10, 2012
The Internal Revenue Service urged a bankruptcy judge to reject solar panel maker Solyndra LLC’s bankruptcy plan Wednesday, saying it amounts to little more than an avenue for owners of an empty corporate shell to avoid paying taxes.
“The undeniable conclusion is that tax benefits drive this plan,” attorneys for the IRS wrote in a bankruptcy pleading.
Arguing that the bankruptcy court ought not confirm a plan “whose principal purpose is tax avoidance,” attorneys said in filings in U.S. Bankruptcy Court in Delaware that the tax breaks would be worth more money than funds set aside for creditors.
Taxpayers are on the hook for more than a half-billion dollars after the company filed for bankruptcy last year, just two years after winning a loan guarantee from the Department of Energy.
What’s more, government attorneys said that as far back as 2010, Solyndra owners had “planned meticulously” to be able to use Solyndra’s net operating losses to offset future tax liabilities.


IRS says 'tax avoidance' at heart of Solyndra bankruptcy plan - Washington Times

 

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Granny says, "Mebbe he needs to do a better job o' screenin' `em...

Obama: ‘Some of the Businesses We Encourage Will Fail’
November 1, 2012 – President Obama told a campaign rally that “some of the businesses we encourage will fail” while talking about his plans for increased green energy subsidies in a possible second term.

“Today there are thousands of workers building long-lasting batteries and wind turbines and solar panels all across the country, jobs that weren’t there four years ago,” Obama said, touting his administration’s efforts to subsidize the green energy industry. Obama then admitted that not everything the government will “bet on” will be successful, admitting that in fact some of the businesses he plans to give taxpayer funds will be sure to fail. “And sure, not all of the technologies we bet on will pan out. Some of the businesses we encourage will fail, but I promise you this: there is a future for manufacturing here in America,” he said. “There’s a future for clean energy here in America, and I refuse to cede that future to other countries.”

Obama’s signature green energy subsidy program has been plagued by high-profile failures, most notably of solar-panel manufacturer Solyndra, which received $500 million in government loans and became the face of Obama’s green jobs initiative before going bankrupt in 2010, defaulting on its government loans after administration officials took extraordinary measures to save it, even subordinating those loans to those of private investors, making sure that taxpayers were repaid last.

Normally, government loans are required to be senior to those of private investors, ensuring that taxpayers are first in line to get their money back if the company fails. Other high-profile green energy failures include Abound Solar, electric car maker Fisker, and the much-hyped electric Chevy Volt, which ceased production earlier this year due to a lack of consumer demand.

Obama made the Volt another centerpiece of not only his green energy policies but also of his auto bailout, pointing to it as evidence that his administration had refocused General Motors on making the cars of the future. Obama even sat in a Volt during a visit to a manufacturing plant in Michigan where the car’s battery is made. Obama has doubled-down on the controversial subsidy program as part of a second-term agenda, saying repeatedly at campaign stops that he plans to continue the program as part of his plans to increase manufacturing output.

Obama:

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Battery firm’s bankruptcy threatens high-end carmaker
Wednesday, October 31, 2012 > The recent bankruptcy of battery maker A123 Systems after it won a nearly quarter-billion-dollar federal grant threatens the business prospects of another well-known government-backed company: luxury car manufacturer Fisker Automotive.

Fisker has received nearly $200 million in federal loan money in recent years, but one of its signature vehicles is powered by batteries that come off the assembly line of bankrupt A123 Systems. And now A123 wants to get out of its contract with Fisker, according to court records. While Fisker officials did not return email messages Wednesday, company attorneys laid bare the extent of the firm’s ties in a recent filing in U.S. Bankruptcy Court in Delaware.

A123 reported more than one-fourth of its revenue from Fisker in 2011, but the battery maker wants a judge to break its Fisker contract as well as other contracts, saying the deals are below market and unduly burdensome. The problem for Fisker is that the car manufacturer has no short-term suppliers for the batteries that help power a high-end sports sedan it makes called the Karma. Attorneys for Fisker said in a court filing that if a judge allows A123 to break the contract, “Fisker’s ongoing business and operations will be severely disrupted and harmed.”

The company said A123’s role as the sole supplier of battery packs for the Karma means no other companies can, at least in the near term, supply Fisker with a crucial component. “Consequently, the rejection of the Fisker contract represents an immediate threat of significant disruption and harm to Fisker’s business, with a corresponding negative impact on Fisker’s lenders, suppliers, customers and investors,” attorneys wrote in a filing. Those investors include, of course, U.S. taxpayers. The Energy Department has, through loans or grants, been generous to both companies.

Despite winning a nearly quarter-billion-dollar grant, Massachusetts-based A123 filed for bankruptcy in October, setting off a reported bidding war for the company between Chinese-based Wanxiang Group Corp. and Johnson Controls Inc. Attorneys for A123 said the Fisker contract, among others, should be rejected because many of the arrangements were “below market” and the company has been performing at a net loss under many of the contracts. The company also said while it had plans to sell its automotive business to Johnson Controls, the Fisker contract and others would not be attractive to potential buyers.

Read more: url=http://www.washingtontimes.com/news/2012/oct/31/battery-firms-bankruptcy-threatens-high-end-carmak/#ixzz2B0owKtfh]Battery firm’s bankruptcy threatens high-end carmaker - Washington Times[/url]