(Updates with government’s argument in second paragraph.)
Nov. 14 (Bloomberg) -- Beacon Power Corp. shouldn’t be allowed to use cash earmarked as loan collateral, the U.S. Energy Department told a bankruptcy judge.
“Debtors should not be permitted to use DOE’s cash collateral when their continued existence is highly uncertain given the lack of any sources of capital other than the DOE itself,” Matthew Troy, an Energy Department lawyer, said in court papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
U.S. Bankruptcy Judge Kevin Carey at a Nov. 2 hearing granted Beacon temporary approval to use cash collateral over the objections from the government. Carey ordered the company to compile data on expenditures, especially any involving Energy Department cash.
Beacon, an energy-storage company that received $43 million in backing from the U.S. program that supported failed solar- panel maker Solyndra LLC, filed for bankruptcy Oct. 30 after struggling to raise private financing. The company reported assets of $72 million and debt of $47 million in its Chapter 11 petition.
The company’s so-called flywheel technology to store energy is used in electrical power grids.
Beacon’s request should also be denied because the debtors “assume, incorrectly, that DOE will continue to advance funds under the loan agreements,” Troy said in court papers. “Absent these advances, the debtors cannot continue to operate even under their own budget.”
Beacon, based in Tyngsboro, Massachusetts, currently operates the Stephentown Regulation Services LLC facility. The 20-megawatt facility in Stephentown, New York, was funded using the Energy Department loan guarantee issued in August 2010. The Energy Department has a first priority lien on the assets of the facility.
The case is In re Beacon Power Corp., 11-13450, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Phil Milford in Wilmington, Delaware. Editors: Michael Hytha, Douglas Wong
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