* CFO won't say if company in talks with U.S. buyers
* Govt attorney said should have gone bankrupt long ago
* Govt objects to company's request to use cash collateral
By Tom Hals
WILMINGTON, Del., Sept 7 (Reuters) - The chief financial officer of bankrupt start-up Solyndra, which had ramped up its operations after getting a U.S. government loan for solar companies, declined to say on Wednesday if potential buyers would keep its business in the United States.
Under questioning at a bankruptcy court hearing from a U.S. government attorney, CFO W.G. Stover declined to identify either of the two companies that have shown an interest in Solyndra's operations, or even where they were based.
Asked if the potential buyers might move Solyndra's unique solar cylinder business overseas, Stover would only say doing so would increase the cost to a potential buyer.
Matthew Troy, an attorney for the Department of Justice, said the government's $535 million loan required the business be operated in the United States.
The U.S. solar industry has been hit by plummeting prices for panels as European governments cut subsidies, hitting global demand, at the same time that Beijing-backed Chinese manufacturers step up production.
Solyndra filed for bankruptcy on Tuesday, becoming the third U.S. solar company to collapse in recent weeks. The company opened a manufacturing plant with a loan extended by the U.S. Federal Financing Bank and guaranteed by the Department of Energy. President Barack Obama visited Solyndra's Fremont, California, plant last year.
The government's loan is third in line for repayment behind a proposed $4 million bankruptcy loan and a $69.3 million first-lien loan. Those two loans were extended in part by Argonaut Ventures LLC, a venture capital firm in San Francisco.
Solyndra's attorney, Maxim Litvak, of Pachulski Stang Ziehl & Jones LLP, declined to say if the company had enough value to repay the government loan.
The company has secured debts of $783.8 million, according to court documents filed with its bankruptcy on Tuesday.
The U.S. government objected to requests by the company to use lenders' cash collateral to give Solyndra four weeks to find a commitment from a buyer.
"It's clear this company should have filed for bankruptcy a long time ago and didn't," Troy said. He also questioned why Solyndra still needed 113 employees after laying off about 1,000 people last week.
Stover said a potential buyer was sending a contingent to its California headquarters next week for talks, but that no detailed terms had been discussed.
The case is Solyndra LLC, Case No. 11-12799, U.S. Bankruptcy Court, District of Delaware. (Reporting by Tom Hals, editing by Dave Zimmerman)