Bloomberg News

Former A123 Battery Maker’s Accord With Fisker Approved

April 17, 2013

B456 Systems Inc., the bankrupt electric-car battery maker formerly called A123 Systems Inc. (AONEQ:US), got approval of a settlement with Fisker Automotive Inc. reducing its claims by 89 percent to $15 million.

U.S. Bankruptcy Judge Kevin Carey approved the settlement at a hearing today in Wilmington, Delaware, after no objections were filed.

The accord with B456’s unsecured-creditors’ committee will substantially cut the luxury plug-in carmaker’s $140 million in purported claims stemming from a rejection of its supply agreement and alleged breach of warranty obligations, according to court documents.

“This reduction will have a substantial positive effect on the value of other unsecured claims,” the committee said in a court filing when the settlement was reached.

Fisker’s $48.7 million breach-of-warranty claim will be reduced 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.

A123, based in Waltham, Massachusetts, 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.

Federal Grant

The ex-battery maker, 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.

As part of the settlement, Anaheim, California-based Fisker agreed to support the former battery maker’s liquidation plan. In March, Carey approved A123’s disclosure statement, a description of the liquidation plan that can be used by creditors to decide how to vote.

B456 pushed back its plan-approval hearing to May 20 because it’s determining “how best to monetize” its remaining assets, if possible, which may result in changes to the plan, company attorney Caroline Reckler told Carey at the hearing.

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

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


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