U.S.-backed battery firm Ener1 seeks Chapter 11 bankruptcy
Another company that received backing from the U.S. Department of Energy files for Chapter 11 bankruptcy protection.
U.S. government-backed battery supplier Ener1 has filed for Chapter 11 bankruptcy, the third U.S.-backed energy company to file in as many months.
Ener1 posted a notice today stating that it "has reached agreement with its primary investors and lenders on a restructuring plan that will significantly reduce its debt." This action will pave the way for up to $81 million for recapitalization, the company said.
A "pre-packaged" Chapter 11 case was filed in U.S. Bankruptcy Court in the Southern District of New York. Ener1 is planning to complete the restructuring process within 45 days.
"This was a difficult, but necessary, decision for our company," Ener1 CEO Alex Sorokin said in a statement. "Our business plan was impacted when demand for lithium-ion batteries slowed due to lower-than-expected adoption for electric passenger vehicles," he added.
Its already precarious position was exacerbated when it lost a major customer, Think Global, which filed for bankruptcy in June 2011. "For which we were exclusively providing commercial lithium-ion battery packs," Sorokin said.
Ener1 has also had trouble competing with battery companies in China and South Korea, where manufacturing costs are lower, according to a report. That is not unlike .
And U.S.-based energy storage company. Both Solyndra and Beacon Power received loans through the Department of Energy's Loan Guarantee program, though Beacon .
Ener1 is the parent of a company that received a $118 million U.S. Energy Department grant to make electric-car batteries.
The New York-based company listed assets of $73.9 million and debt of $90.5 million as of December 31 in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan, according to Bloomberg.
In the State of the Union speech Tuesday night, President Obama said "some companies will fail" but promised he would "not walk away from the promise of clean energy."