A123 Receives Approval for Bankruptcy Plan image

A123 Systems has received final approval from a Delaware bankruptcy judge for its reorganization plan.

A123 Systems has already sold almost all its assets to U.S. arm of Chinese company Wanxiang Group for almost $257 million, after it filed for Chapter 11 bankruptcy protection in October. A123 also received a $249-million grant offered by the Department of Energy, part of the money being used for plants, equipment and employees at the plants located in Livonia and Romulus. Although the company planned to hire 5,900 workers at the plants in US, in 2011 the Michigan workforce has around 1,000 employees.

In March, U.S. Bankruptcy Judge Kevin Carey approved A123 Systems strategy to seek votes from creditors for its repayment plan. U.S. Bankruptcy Judge Kevin Carey approved the EV battery maker’s disclosure statement, which is an outline of its liquidation strategy used by creditors to vote for this plan.

Last month, a bankruptcy judge in Delaware approved a settlement between Fisker and A123 Systems. The settlement reduces Fisker’s claims against battery supplier A123 Systems, now known as B456 Systems, by almost 90%. Fisker will receive $15 million unsecured claim on its initial claim of $48.7 million against the battery supplier for breach of warranty. The judge disallowed the automaker’s $91.2 million claim for rejection of its supply agreement with B456 Systems.

Source: Detroit Free Press