| WILMINGTON, Del., Sept 7
WILMINGTON, Del., Sept 7 The U.S. government is
gearing up for a politically charged fight over Solyndra's
bankruptcy plan, as the former solar panel maker supported by
President Barack Obama revealed a further $23 million in
potential tax breaks for its venture capital backers.
A U.S. bankruptcy judge on Friday cleared the way for
creditors to vote on the plan, and scheduled a hearing to
consider approval on Oct. 17, less than three weeks before the
Nov. 6 elections.
An attorney for the Internal Revenue Service said his
agency anticipated objecting, setting up a fight over tax
The tax breaks, which Solyndra's lawyers described on Friday
as "business tax credits" from 2010 and 2011, will likely fuel
Republican attacks that Solyndra was a sweetheart deal for a
major Democratic fundraiser.
They are on top of $341 million in potential tax breaks
available to venture capital backers Madrone Partners and
Argonaut Ventures that Solyndra disclosed earlier this week.
Argonaut is the investment arm of a foundation tied to the
Democratic fundraiser, Oklahoma billionaire George Kaiser.
The failure of the company Obama held up as an example of
government backing for renewable energy jobs is a political
weapon for Republicans ahead of the November elections as they
highlight energy policies more favorable to fossil fuels.
Solyndra's bankruptcy plan could prove a further
embarassment to the administration if it is seen rewarding
risk-driven venture capitalists ahead of unsecured creditors
such as suppliers and laid-off staff.
Solyndra has said in recent court filings it may not be able
to repay any of the $528 million that the U.S. government had
lent in 2009 to promote clean energy businesses.
Neither Argonaut nor Madrone immediately responded to
requests for comment.
Stuart Gibson, a lawyer for the Internal Revenue Service,
said at the hearing that his agency expects to object to
Solyndra's repayment plan because the bankruptcy code bars plans
in which the principal purpose is to avoid taxes.
Republicans have seized on Solyndra's failure to accuse the
White House of rushing the $528 million loan in part to help the
venture capital backers. The Obama administration has said the
loan was based on the merits of Solyndra's business prospects.
Solyndra filed for Chapter 11 protection from creditors on
Sept. 6, 2011, as it and other solar panel companies were hurt
by a flood of cheap imports from China that drove down prices.
The company has auctioned virtually everything from
inventory, office equipment and real estate to repay its debts,
but may prove unable to pay any of its unsecured creditors.
Some of those creditors are nonetheless expected to vote for
the plan, after Argonaut and Madrone agreed to provide as much
as six cents on the dollar for their claims in exchange for the
tax breaks. Without the money from the investment funds
unsecured creditors would get nothing.
The investment funds plan to bring Solyndra's holding
company out of bankruptcy and use the tax breaks.
Argonaut invested more than $200 million in Solyndra stock
and lent the company $125 million, according to court and
regulatory filings. Madrone, meanwhile, invested at least $36
million in Solyndra stock and lent the company at least $100
Solyndra filed in 2010 for an initial public offering but
never went public. Objections to its bankruptcy plan are due by