Future Unclear For Bankrupt A123 Battery Firm As Rescuers Maneuver

Bankrupt battery maker A123 Systems could finally be on the verge of successfully securing a loan from a Chinese auto parts maker. The company will discuss with bankruptcy courts to secure approval for a loan from Wanxiang Group Corp.

A123 became bankrupt after a $465 million rescuedeal from the Chinese company fell through, with A123 unable to meet some of the terms of the companies' agreement. Wanxiang would have owned 80 percent of the struggling firm, which supplies batteries for Fisker, BMW, and the upcoming Chevrolet Spark EV.

As Reuters reports, an interim debtor-in-possession (DIP) loan from auto parts supplier Johnson Controls has been withdrawn to enable the Wanxiang loan to proceed. Johnson Controls has said it will still maintain its $125 million bid for A123's automotive assets. However, a replacement DIP loan from Wanxiang could put the Chinese company at an advantage over Johnson Controls.

Fisker, who objected to the $125 million bid from Johnson Controls, should also be better served should the Chinese bid succeed. The luxury carmaker was responsible for 26 percent of A123's income in 2011, and its battery recall over faulty cells has been partly responsible for A123's downfall. The main stumbling block to Wanxiang could be gaining approval from both the Committee of Foreign Investment in the U.S, and the Government of China, before the deal goes ahead.

If that goes well, then only a challenge from Johnson Controls over assets would stand in the way of the loan.

For A123 and its stakeholders, a resolution can't come too soon.

Source: Green Car Reports