Even with a $535 million federal loan, solar company Solyndra LLC has filed for bankruptcy protection from its creditors, as reported by Bloomberg and other news media.
This is the third solar company that has filed bankruptcy since August.
According to court papers filed in Wilmington, Delaware, U.S. Bankruptcy Court, as of January 1 Solyndra owed $783.8 million to its lenders - that number includes $527.8 million to the U.S. government - and had assets at approximately $859 million.
Solyndra blames foreign manufacturers, with assistance by their governments, which produced an oversupply of solar panels. The foreign-made panels were then offered at lower prices than domestic made ones, and also allowed buyers longer payment term arrangements.
W.G. Stover, Solyndra's chief financial officer, said that their demand fell when European governments reduced incentives for buying solar energy.
Stover said that Solyndra saw a loss in their collections when "foreign competitors offered extended-payment terms, resulting in Solyndra's customers refusing to honor their previously agreed payment terms."
During the bankruptcy, per Stover, the company will either sell the business or liquidate to satisfy its creditors.
The biggest lender is the U.S. Treasury Department per court papers. The U.S. loan is listed behind $69.3 million owed to other lenders, including Argonaut Ventures.
Argonaut Ventures is Solyndra's affiliate and biggest shareholder.
The U.S. Energy Department, which had guaranteed the loan, worked with the Solyndra investors to bridge financing and allow time for the company to locate new capital. By August 30, no new financing was available.
Solyndra stopped producing its cylindrical solar panels, and fired 1,100 of its employees, on August 31.
The U.S. loan, along with notes sold to private investors, was spent on building a new factory that had opened in January.
A collateral agent for the lenders holds $198 million that was raised from Solyndra investors. It includes the U.S. loan.
The U.S. loan has received criticism from Republicans in the U.S. House of Representatives, and a subcommittee of the House of Energy and Commerce Committee probed the loan guarantee earlier this year.
President Barack Obama, in visiting Solyndra in 2010, allegedly said that even though the company is now in bankruptcy, the U.S. must continue to support renewable energy.
Two trade creditors are the biggest unsecured claims: $7.7 million to Schott North America Inc. and $7.5 million to MGS Mfg. Group. The remaining monies owed to unsecured lenders are $4.8 million to Howard Hughes Medical Institute, $3.7 million to OZ Offshore Capital Lenders LLC and $3.5 million to US Venture Partners X LP.
The company is planning on hiring a legal advisor from the firm Pachulski Stang Ziehl & Jones LLP.
There are approximately 113 employees still on the payroll to "assist the debtors with their restructuring efforts."
Another solar panel company that filed last month and blamed competition in China was Evergreen Solar Inc.
Contact a bankruptcy attorney if you are considering a personal or business filing. Foreign competition is only one reason among many that has been cited for filing bankruptcy in our faltering economy.