Bloomberg News

Ex-A123 Battery Maker Accord Cuts Fisker Claim by 89%

April 04, 2013

The bankrupt electric-car battery maker formerly called A123 Systems Inc. (AONEQ:US), now renamed B456 Systems Inc., reached a settlement in which Fisker Automotive Inc. reduced its claims by 89 percent to $15 million.

The accord with the bankruptcy’s unsecured-creditors’ committee will substantially cut Fisker’s $140 million in claims stemming from a rejection of its supply agreement and alleged breach of warranty obligations, according to court documents filed April 2 in Wilmington, Delaware. The agreement will benefit all unsecured creditors, the committee’s lawyers said.

“This reduction will have a substantial positive effect on the value of other unsecured claims,” lawyers for the committee said in a court filing. The committee “analyzed the Fisker proofs of claim, and the committee believes that the settlement embodied in the stipulation represents a compromise that is the best possible outcome” for B456’s estate.

Fisker’s breach-of-warranty claim will be reduced from $48.7 million to a $15 million unsecured claim and its $91.2 million claim for damages from the rejection of its supply agreement will be disallowed, according to court documents.

U.S. Bankruptcy Judge Kevin Carey approved A123’s disclosure statement, an outline of its liquidation plan used by creditors to decide how to vote on the plan, according to court documents filed March 14.

The company will seek court approval of the plan, which includes distributing the proceeds from selling substantially all of its assets, at a hearing scheduled for April 30.

Nearer Confirmation

“This settlement provides that Fisker shall support the plan, and therefore this settlement moves these cases closer toward the ultimate goal of confirmation,” the creditors’ committee said in court papers.

The Waltham, Massachusetts-based company filed for bankruptcy (AONEQ:US) in October after a previous deal with Wanxiang Group Co., China’s biggest auto-parts maker, was scuttled amid congressional Republicans’ reluctance to allow its sale to a Chinese company.

A123, which was awarded a federal grant of as much as $249.1 million and only used about $132 million to build two plants in Michigan, listed assets of $459.8 million and debt of $376 million as of Aug. 31 in court documents.

The company got court approval Dec. 11 to sell the majority of its assets to Wanxiang’s U.S. unit. Wanxiang America Corp. acquired substantially all of A123’s automotive, grid and commercial business assets for about $256.6 million. The deal received approval from the Committee on Foreign Investment in the U.S. on Jan. 29.

U.S.-Backed Technology

CFIUS, as it is known, is a federal interagency group led by the Treasury Department that reviewed the sale after members of Congress expressed national-security concerns over allowing a foreign competitor to obtain the technology developed with government backing.

The case is In re B456 Systems Inc., 12-12859, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net; Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net.

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


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