Bloomberg News

Solyndra Junior Creditors Oppose Naming Bankruptcy Trustee

October 11, 2011

(Updates with excerpt from filing in second paragraph.)

Oct. 11 (Bloomberg) -- Solyndra LLC’s junior creditors opposed U.S. officials’ request for a trustee to oversee the bankruptcy of the defunct solar-panel maker, claiming it would make the company harder to sell.

“The trustee motion adds to the already highly charged negative atmosphere surrounding Solyndra at a critical stage in these cases and actually may delay the sale process,” the official committee of unsecured creditors said in a filing today in U.S. Bankruptcy Court in Wilmington, Delaware.

The committee represents creditors who hold debt that ranks behind loans guaranteed by the U.S. Energy Department. Solyndra, based in Fremont, California, faces probes by the Federal Bureau of Investigation and Republicans in Congress over a $535 million federal loan guarantee it used to build a $733 million factory.

Solyndra filed for bankruptcy last month with a plan to either sell the eight-month-old factory or liquidate the specialized equipment used to manufacture its solar panels.

Last month, Roberta A. DeAngelis, U.S. Trustee for the Mid- Atlantic region, asked U.S. Bankruptcy Judge Mary Walrath to appoint a trustee to oversee Solyndra while it is in bankruptcy. The U.S. Trustee is an arm of the U.S. Justice Department that monitors corporate bankruptcies.

‘Fiduciary Duties’

Solyndra Chief Executive Officer Brian Harrison and Chief Financial Officer W.G. Stover have asserted their constitutional right not to answer questions related to a criminal matter, preventing them from “properly exercising their fiduciary duties” in the bankruptcy, DeAngelis said.

A trustee would interfere with Solyndra’s effort to sell itself through a court-supervised auction, the unsecured creditor’s committee said. The company received court approval last month to hold an Oct. 27 auction to sell its assets, including the Fremont factory.

The case is In re Solyndra LLC 11-12799, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--Editors: Stephen Farr, Charles Carter

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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