A company that may be able to make a significant change in the types of batteries used in cars across New Jersey and across the country filed for bankruptcy recently. The Chapter 11 bankruptcy filing came after a deal to sell control of A123 Systems Inc. to a foreign firm fell apart. The deal had come under pressure due to concern over some of the technology that could be transferred with foreign ownership.
The Chapter 11 bankruptcy filing includes a potential sale of control of the company to a firm from this country. The new ownership, if approved by the bankruptcy court, would offer A123 a total of $125 million. This includes an initial amount of $72.5 million in cash, money that would allow the company to remain in business during the bankruptcy process.
The Chinese firm who had originally offered to purchase control of A123 had made a financial offer of a total of $465 million. This much higher offer may be the subject of some debate as the bankruptcy process moves forward. However, any deal to sell control of the company will require approval by the bankruptcy court.
Like similar Chapter 11 bankruptcy cases in New Jersey, the company in this case likely sought the protections of the applicable laws to give it time to review its financial situation. This time will also allow the business to begin a restructuring that may allow it to become a more profitable pursuit. In such situations, companies often seek the relief from creditor pursuits that is offered by bankruptcy rules so that they may work towards a fresh financial start.
Source: Chicago Tribune, “Car battery-maker A123 files for Chapter 11,” Julie Wernau, Oct. 16, 2012