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The company filed for Chapter 11 bankruptcy protection in federal court in Delaware. In a recent regulatory filing, A123 Systems acknowledged that a default on some of its debt was likely and warned that it might be headed for bankruptcy protection. But it said on Tuesday it had entered an asset purchase agreement with Johnson Controls valued at $125 million and that Johnson Controls would acquire the firm’s automotive business assets in Michigan.

In recent weeks, A123 Systems looked to be on the verge of a  bailout through a $450 million investment by Chinese auto-parts maker Wanxiang Group. But in a statement Tuesday, A123 chief executive David Vieau said: “We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes the inherent value of our automotive technology and automotive business assets.”