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Solyndra beats back federal takeover, but not Justice concerns
Solar-panel maker Solyndra LLC defeated a proposed government takeover bid, but the attempt underscored the depth of concerns in recent weeks at the Justice Department about the roles played by the bankrupt company’s top financial officer and its board of directors.
Lisa D. Tingue, an attorney for the U.S. Office of the Trustee, an arm of the Justice Department that oversees bankruptcy cases, on Monday cited the continuing employment of Solyndra’s chief financial officer, W.G. Stover, as a factor in the government’s request that a court-appointed trustee run the California-based company.
“We’re happy he did it earlier rather than later,” she said.
Mr. Stover and Mr. Harrison refused to testify before a House committee investigating the Solyndra collapse, citing their Fifth Amendment right against self-incrimination. The company was raided by the FBI last month, days after filing for bankruptcy. Just two years earlier, Solyndra had won more than a half-billion dollars in federal loan guarantees.
The company did not respond to email and phone messages Wednesday concerning Mr. Stover.
At the court hearing, Ms. Tingue all but suggested that Mr. Stover ought to follow Mr. Harrison and leave the company, though there was no indication that would happen anytime soon. She also questioned whether Solyndra would be transparent with the same board of directors in place.
Attorneys for the company had said in court filings that Mr. Harrison’s departure was planned and that a chief restructuring officer was taking over. They also balked at any suggestion that the company wasn’t being transparent, saying Solyndra repeatedly has provided information to the government.
Saying there was no indication of fraud or mismanagement, U.S. Bankruptcy Judge Mary F. Walrath declined to appoint a trustee, which would have ousted the current management. Still, while noting “concern” about Mr. Stover’s position at the company, she called the appointment of an outside chief restructuring officer to run the company a “good compromise.”
Before joining Solyndra in the summer of 2007, Mr. Stover was chief financial officer for Micron Technology in Idaho, which he joined in 1994, according to the Idaho Statesman. The newspaper reported that in 2006, he was the company’s third-highest-paid executive, with $1.9 million in compensation. He retired shortly after the company announced a round of layoffs.
By calling for a chief restructuring officer instead of a trustee, the judge’s decision means the officer, R. Todd Neilson, and the firm where he is a director, Berkeley Research Group LLC, stand to earn between $900,000 and $1.1 million in fees during the bankruptcy, according to court filings.
A former FBI agent specializing in white-collar crime, Mr. Neilson has served as a bankruptcy trustee in several high-profile cases, including for clients Mike Tyson and Death Row Records. According to Berkeley’s website, he also has operated and negotiated the sale of ownership interests in the Los Angeles Kings and the Nashville Predators hockey franchises.
Still, the board of directors for 360 Degree Solar Holdings, a Solyndra affiliate, “will have direct oversight and control over the [chief restructuring officer] and [Berkeley Research Group] professionals in these cases,” the recent motion by Solyndra attorneys to appoint Mr. Neilson states.
Meanwhile, Congress is continuing to investigate whether the Obama administration ignored warning signs about the company’s precarious finances from inside and outside the government.
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About the Author
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