Solar panel maker, Solyndra, which received $535 million federal loans, filed its plan for reorganization in a Delaware
Under the reorganization plan, administrative expenses and holders of priority claims will be paid in full. Assets will be placed in the Solyndra Residual Trust. Those who have unsecured claims, which are valued between $50 million and $200 million, will receive 2 to 6 percent of what they are actually owed.
Solyndra abruptly laid-off all of their employees when they filed for Chapter 11. It is unlikely that the government will recover any of the money for the loans Solyndra received.
When Solyndra filed for Chapter 11 in August 2011, it started a flurry of controversy in Washington, with legislators launching an investigation on why the company failed, especially after receiving millions in taxpayer’s funds through a Department of Energy loan program. In the past year, numerous solar companies that also received federal loans have entered Chapter 11 debt-reduction plans.
The majority of solar companies that have entered bankruptcy blame their failing business on China. The Chinese government heavily subsidized their solar program allowing manufacturers to offer solar panels at half the cost of American-made panels, which flooded the market making it impossible for stateside manufacturers to compete. In May of this year, the Department of Commerce imposed steep tariffs on Chinese solar manufacturers.
Under Chapter 11, a bankruptcy attorney will have to develop and introduce a plan to satisfy the troubled company’s creditors. Though Solyndra may not emerge from Chapter 11 as an intact company, many other businesses chose this structure because they can continue to operate and return to solvency.