Solyndra sold assets cheap for fast cash

[Geee]

Washington Times:

Fast running out of money, solar-panel maker Solyndra LLC last summer sold off nearly $60 million worth of inventory for less than $20 million in cash to a newly formed corporate entity closely tied to the company’s biggest investors, records show.

Backed by $535 million in federal loan guarantees but burning through the little cash it had left, Solyndra made its first sale in late July to a corporate entity that had been formed just a day earlier. Three more transactions followed over the next few weeks with the same buyer, Solyndra Solar II.

By the time the last sale took place on Aug. 29 — two days before the company announced plans to file for bankruptcy — Solyndra had sold off a total of $58.1 million worth of inventory for $17.5 million, according to documents Solyndra attorneys filed last month in U.S. Bankruptcy Court in Delaware.

The sales began at a time when Solyndra officials were trying hard to assure lawmakers and the public of the company’s prospects amid increasing questions about the company’s financial health. Inside the company, the sales transactions show, officials were moving fast to raise cash and buy Solyndra more time.

Todd Zywicki, bankruptcy professor at the George Mason University School of Law, said it’s not unusual for troubled companies to sell off assets to improve liquidity. But he said the inventory sales figure cited by Solyndra — $58.1 million in inventory for $17.5 million in cash — seems unusual.

“The test under the bankruptcy code is whether the sale was for reasonably equivalent value and selling inventory at such a huge discount raises real concerns,” he said. “If Solyndra Solar II is owned or controlled by any insiders or anything like that, then it becomes even more suspicious.”

Solyndra Solar II was formed in Delaware by affiliates of Solyndra’s debtor in possession lender — investors Argonaut Private Equity and Madrone Capital Partners — as well as other debt holders, bankruptcy and government records show. Another special-purpose entity, Solyndra Solar LLC, was formed to purchase the company’s accounts receivable.

[Rokke]

Good grief. This issue alone should sink Obama. Unfortunately, it is minor compared to the trillions he's hung around the neck of this country. And to date, he's not really even taking heat for that.

[RandyM]

Good grief. This issue alone should sink Obama. Unfortunately, it is minor compared to the trillions he's hung around the neck of this country. And to date, he's not really even taking heat for that.

 

And to think they used to call Reagan the "Teflon President".

[clearvision]

Maybe we can start calling him the "Lard President"...