Court refuses to replace Solyndra management
By Tom Hals
WILMINGTON, Delaware | Mon Oct 17, 2011 6:33pm EDT
(Reuters) – A judge declined to appoint a trustee to replace Solyndra’s management who were accused of not answering questions about the bankruptcy of the government-backed solar panel maker.
“It’s clear this case does not rise to the level of failure to disclose that would mandate the appointment of a trustee,” said Delaware bankruptcy judge Mary Walrath.
The bankrupt company’s chief executive, Brian Harrison, resigned on October 7, and it has mothballed its manufacturing as it tries to find a buyer for its business.
However, other senior managers remain in place, including W.G. Stover, the chief financial officer who refused to answer questions before a Congressional panel investigating the company.
Company representatives also refused to discuss contracts in a meeting with the U.S. Department of Justice, which prompted the request for a court-appointed trustee.
Solyndra filed for bankruptcy on September 6, burdened with $783 million of secured debt and squeezed by falling prices for solar panels caused by an industry glut.
The Department of Energy guaranteed a $535 million loan to the company that Solyndra has said may not be repaid in full.
Its downfall has become a political embarrassment for the Obama administration, which had promoted Solyndra as an example of how it planned to spur development in clean energy technology.
The company has also been the target of a Congressional probe since February and its headquarters were raided by the Federal Bureau of Investigation days after the bankruptcy filing.
Monday’s hearing centered around an “initial debtor interview” where Department of Justice officials press company representatives for data to determine which information is meaningful for creditors.
Solyndra officials at the meeting were asked about a 2008 press release in which the company trumpeted $1.2 billion in long-term contracts, far exceeding the company’s $250 million in cumulative revenues up to its bankruptcy.
A Department of Justice official said he wanted to know if valuable contracts were involved in the sale of the company.
The company officials declined to respond because contracts were cited in the FBI’s search warrant, according to Solyndra’s vice counsel, Benjamin Schwartz.
Solyndra also argued against a trustee because it has brought in a turnaround specialist, Todd Neilson of Berkeley Research Group LLC, to take over running the company.
Solyndra lawyers told the court they would provide more information about contracts at a meeting with creditors scheduled for Tuesday.
After the hearing, Eric Carlson of Imperial Capital LLC who is advising Solyndra on the sale of its business, said there was active interest in the company’s operations from buyers in United States and five other countries.
He said he would be meeting with potential buyers at a solar power convention in Dallas this month.
The case is In re Solyndra LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12799
(Reporting by Tom Hals, editing by Bernard Orr)