US Government May Object to Solyndra Plan

by San Antonio Attorney

The U.S. government is preparing for a fight over the bankruptcy plan of Solyndra, as the failed solar panel manufacturer supported by the Obama administration disclosed an additional $23 million in future tax deductions for its venture capital investors.

On Friday, a bankruptcy judge allowed creditors to vote on the plan. A court hearing to consider the plan approval was set on Oct. 17.

According to an IRS attorney, the agency is going to object and set up a fight over tax deductions.

The tax deductions, which Solyndra referred to as tax credits in the last two years, will most probably raise more Republican criticisms.

Solyndra’s early investment funds backers can bring in as much as $341 million in tax breaks, based on court papers filed.

The U.S. government granted a $528 million loan to Solyndra, which may never repay the money. The company has been pressured to disclose the figures of future tax breaks that are available to Argonaut Ventures and Madrone Capital Partners.

At a hearing, IRS attorney Stuart Gibson said the agency is expecting to object to the repayment plan of Solyndra because the bankruptcy code blocks plans where the main objective is to evade taxes.

The former solar panel manufacturer filed for Chapter 11 bankruptcy in Sept. 2011, blaming a glut of low-cost Chinese solar panels that caused the prices to go down.

Solyndra has sold almost everything it had, but may still not be able to repay its unsecured creditors

Nevertheless, some of those unsecured creditors will probably vote for the repayment plan. This is after Madrone and Argonaut decided to provide up to six cents on the dollar for their claims in return for the tax credits.

Argonaut bought over $200 million in stock and financed Solyndra with $125 million, based on court documents. On the other hand, Madrone bought $36 million in stock and financed Solyndra with $100 million.

 

–  A frequent misconception about bankruptcy is that all government debts are not dischargeable in bankruptcy. This is actually not true. The most common government issued loans are student loans, Veterans Administration (VA) loans and Small Business Administration (SBA) loans. The student loans are almost always non-dischargeable but VA and SBA loans are dischargeable. Find Bankruptcy Help to know more about the dischargeable debts in bankruptcy.

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