Bankrupt battery company readies for auction

| Dec 1, 2012 | Business & Commercial Bankruptcy |

A123 was once a prominent business in the green world. The startup lithium-ion battery maker was launched in 2001 and went public nine years later. Then, it was valued at over $2 billion. Now, however, A123 is in a very different place.

After filing for bankruptcy, the company is set to be auctioned off next week – and the possible contenders have a lot of people talking. Those vying for the company include U.S.-based Johnson Controls and Wanxiang, a Chinese company. What should add an interesting twist to the process, though, is that the U.S. government must approve the sale of the company.

The federal government has stepped in because A123 was backed by it in part. In 2010, the company was given half of a $249 million grant to help fund the erection of a new facility. While details are still hazy, some say the government has chosen to intervene in order to block out any foreign investors. Some members of Congress have expressed worry over the possibility of a Chinese company purchasing A123. However a Japanese company and German company have also expressed interest.

With the auction set to begin next week, it will be interesting to see what moves the potential players will make. In the meantime, though, this situation shows how complex a business bankruptcy can be. Although no business owners hope to file for bankruptcy, sometimes it is necessary when expenses significantly outweigh revenue. Bankruptcy is not all bad, though, and some businesses are able to stay afloat afterwards. In this case, hopefully whoever buys A123 will help it continue to operate and become successful once again.

Source: Greentech Media, “A123’s Bankruptcy Auction: US, Chinese, Global Players Contend,” Jeff St. John, Nov. 30, 2012