Fisker Automotive failure could hit U.S. taxpayers for years to come
WILMINGTON, Del. Nov 25 (Reuters) - The bankruptcy of Fisker Automotive could end up costing the U.S. government much more than the $168 million it loaned to the maker of the Karma plug-in hybrid sports car.
According to its bankruptcy filing on Friday, Fisker owns tax breaks worth $320 million.
Fisker's bankruptcy papers said the Southern California-based company plans to sell its automotive operations to a business affiliated with Hong Kong tycoon Richard Li, but it will hold on to the tax breaks after it emerges from bankruptcy.
Fisker piled up some $800 million in net operating losses in recent years, which have a future cash benefit worth approximately $320 million, according to the bankruptcy filing.
That lost tax revenue would add to taxpayers' pain from Fisker's failure.
The U.S. Department of Energy extended the company a $529 million credit line in 2009 as part of the Obama administration's efforts to boost advanced vehicle development in the United States.
The credit line was frozen in 2011 before it could be fully drawn.
Fisker is not the first beneficiary to fail to repay a government loan and to try to benefit from the tax breaks generated by the business.
Solar panel maker Solyndra LLC provoked an outcry after its venture capital backers, Argonaut Private Equity and Madrone Capital Partners, took control of that company's tax breaks, which had a potential value of $341 million.
Solyndra filed for bankruptcy protection in September 2011 after receiving a $528 million federal loan.
Other businesses, such as former savings and loan Washington Mutual, have sold their operations and then emerged from Chapter 11 with little more than net operating losses. The owners then hope to find a profitable investment and apply the accumulated tax breaks to avoid future taxes.