Jan 26 (Reuters) - Ener1 Inc, which received a $118.5
million U.S. Department of Energy grant to make lithium-ion and
other batteries for electric cars, filed for bankruptcy
protection amid heavy competition and after the demise of a
large customer.
The Chapter 11 filing with the U.S. bankruptcy court in
Manhattan came 4-1/2 months after Solyndra LLC, a solar panel
company that obtained $535 million of government loan
guarantees, filed for protection from its own creditors.
It comes amid persistent criticism of U.S. President Barack
Obama from Republican lawmakers about whether his administration
is properly assessing "clean energy" companies before
authorizing government support.
The Energy Department had in 2009 awarded the $118.5 million
grant to Ener1's EnerDel unit, as part of a government stimulus
package to bolster the U.S. electric car industry.
U.S. Vice President Joe Biden hailed the grant in a visit to
an Ener1 plant in Indiana exactly one year prior to the
bankruptcy filing, on Jan. 26, 2011. EnerDel has used about $55
million of the grant through Sept. 23, a court filing shows.
Alex Sorokin, Ener1's interim chief executive, in a court
filing said his company faced "intense competition" from other
battery makers such as Toyota Motor Corp, as well as Chinese and
Korean rivals that have lower manufacturing costs.
He also said Ener1 was hurt by the June 2011 bankruptcy of
Norway's Think Global, which had been a major customer and whose
problems led to a planned Ener1 financial restatement, and
slower-than-expected acceptance of electric cars by consumers.
Electric cars have also faced increased scrutiny in
Washington amid worries that General Motors Co's Chevrolet Volt
might catch fire.
A probe completed last week by the National Highway Traffic
Safety Administration found no defects in the Volt.
45-DAY BANKRUPTCY SOUGHT
Ener1 has $73.9 million of assets and $90.5 million of
debts, according to its bankruptcy petition.
It filed a "prepackaged" reorganization plan that it said
has support from enough creditors, and expects to emerge from
Chapter 11 within 45 days.
It said the plan would slash long-term debt, provide up to
$81 million of new equity financing, and allow it to honor its
commitments, which it said include the provision of backup
storage systems for the 2014 Winter Olympics.
Unsecured creditors would be paid in full, but holders of
its 186.9 million shares would receive nothing, Ener1 said. No
jobs would be lost because of the filing, it added.
Jen Stutsman, an Energy Department spokeswoman, called the
bankruptcy "unfortunate," but said the proposed equity infusion
"demonstrates that the technology has merit."
In the Solyndra case, Republican lawmakers are examining
whether political favoritism played a role in the $535 million
loan guarantee to that company, which has ties to an Obama
fundraiser.
Solyndra is selling assets after failing to draw bids to buy
the company. Beacon Power Corp, an energy storage company that
got a $43 million loan guarantee from the Energy Department,
filed for bankruptcy in October.
The White House in October appointed former investment
banker Herb Allison to review Energy Department loans.
Republicans in the House of Representatives pledged on
Thursday to continue their own investigation.
"One bankruptcy may be a fluke, two could be coincidence,
but three is a trend," said Cliff Stearns, a Florida Republican
leading that probe.
The case is In re: Ener1 Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 12-10299.
For Ener1: Edward Estrada and Michael Venditto of Reed
Smith.
(Reporting by Jonathan Stempel and Roberta Rampton)
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