New York-based lithium-ion automotive battery maker Ener1 Inc. has filed for bankruptcy protection, reports Bloomberg Businessweek. The company, which was granted a $118 million U.S. Energy Department grant to make batteries for electric vehicles, defaulted on its bond debt. Competition from Asian battery makers is also believed to have contributed to Ener1’s financial woes.
China, Korea stole Ener1’s thunder
Competing lithium-ion battery makers from China and South Korea that were able to produce with lower manufacturing, labor and raw material costs made things extremely difficult for Ener1 Inc., according to interim CEO Alex Sorokin.
Ener1 Inc’s Chapter 11 bankruptcy papers list assets of $73.9 million and debt of $90.5 million as of Dec. 31, 2011. Among the EV battery maker’s biggest unsecured creditors were Liberty Harbor Special Investments of New York at $39.4 million; Tokyo’s Itochu Corp. at $10.2 million; and Goldman Sachs Palmetto State Credit Union of Florida at $5.63 million.
Ener1 was recently placed under federal scrutiny after safety officials began to investigate the case of Chevrolet Volt batteries catching fire. A two-month investigation cleared Volt of danger, and General Motors is currently in a PR recovery campaign.
The lithium-ion battery maker’s bankruptcy follows the failure other U.S. government-backed renewable energy companies, most notable among them the solar panel maker Solyndra LLC and energy storage company Beacon Power Corp. Both filed for bankruptcy after receiving loan guarantees from the U.S. government.
Over the course of 45 days, Ener1 Inc expects to complete its corporate reorganization. Under the plan in place, the company may get back as much as $81 million in new capital and reduce existing debt, all the while continuing to operate. All unsecured creditors will be paid in full. Common stock will be canceled, but new preferred stock will be granted to the funding party for the bankruptcy protection.
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