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A high-profile corporate bankruptcy has worked its way into the issues being raised by the GOP in the upcoming election. On October 16th, battery maker A123 systems filed for Chapter 11 bankruptcy after amassing $144 million in debt and missing a $2.7 million interest payment earlier this month.
A123 Systems, Inc. was founded in 2001, developing out of a research project at the Massachusetts Institute of Technology and started with $100,000 in seed money provided by the U.S. government. A123 has received $249 million in federal funding for advanced battery technology development; the grant was part of a $2.4 billion stimulus package intended to encourage green energy and advanced vehicle manufacturing domestically.
Andrea Saul, a spokeswoman for the Romney campaign, issued the following statement: "A123's bankruptcy is yet another failure for the president's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.”
In response, the campaign spokesman for the President stated that "Romney is again hypocritically hiding the truth: He picked his own winners and losers with taxpayer dollars as Governor of Massachusetts, loaning millions to two companies run by his donors. They later defaulted on those loans, leaving taxpayers with the bill and eliminating jobs."
A123’s bankruptcy filing lists assets of $459.8 million and liabilities of $376 million. The company plans to sell its automotive assets to Johnson controls, a current supplier of A123, for $125 million. The bankruptcy was precipitated by a lagging electric car market and an expensive recall of A123 batteries this spring, as well as a failed deal with Chinese auto parts maker Wanxiang Group Corp. which was supposed to infuse the company with $450 million.
The Romney campaign is jumping on the company’s failure as an example of wasteful government spending on so-called “green-energy” subsidies. There are at least four other companies that received money from the government since 2008 have also declared bankruptcy.
This post highlights the fact that both people and companies can get into financial trouble. Of course, individuals’ bankruptcies usually do not get national media attention, but the political and economic issues raised here are also present in personal finances. The current economic climate is a complicated issue, but regardless of your politics, the truth is that many people are struggling to stay afloat financially.
If you have fallen behind on your financial obligations, bankruptcy may be an option to consider. Each case is different, which is why it is best to have your situation reviewed by an experienced St. Louis bankruptcy attorney. The attorneys of the Westbrook law group practice exclusively in the area of bankruptcy law and have helped hundreds of clients get a fresh start. We offer free consultations and have evening and weekend appointments available by request. To schedule a free consultation, call us today at (636) 493-9231, or fill out our contact form available to the right. We look forward to helping you regain your financial footing. Remember, your solution starts here.