The recent bankruptcy of battery maker A123 Systems after it won a nearly quarter-billion-dollar federal grant threatens the business prospects of another well-known government-backed company: luxury car manufacturer Fisker Automotive.
While Fisker officials did not return email messages Wednesday, company attorneys laid bare the extent of the firm’s ties in a recent filing in U.S. Bankruptcy Court in Delaware.
A123 reported more than one-fourth of its revenue from Fisker in 2011, but the battery maker wants a judge to break its Fisker contract as well as other contracts, saying the deals are below market and unduly burdensome.
The problem for Fisker is that the car manufacturer has no short-term suppliers for the batteries that help power a high-end sports sedan it makes called the Karma.
“Consequently, the rejection of the Fisker contract represents an immediate threat of significant disruption and harm to Fisker’s business, with a corresponding negative impact on Fisker’s lenders, suppliers, customers and investors,” attorneys wrote in a filing.
Those investors include, of course, U.S. taxpayers. The Energy Department has, through loans or grants, been generous to both companies.
Despite winning a nearly quarter-billion-dollar grant, Massachusetts-based A123 filed for bankruptcy in October, setting off a reported bidding war for the company between Chinese-based Wanxiang Group Corp. and Johnson Controls Inc.
Attorneys for A123 said the Fisker contract, among others, should be rejected because many of the arrangements were “below market” and the company has been performing at a net loss under many of the contracts.View Entire Story
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Jim McElhatton is an investigative reporter for The Washington Times. He can be reached at firstname.lastname@example.org.
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