A123 Systems is the bankrupt electric-car battery company that received a $249.1 million federal grant and won the court approval to borrow $50 million from Wanxiang Group in China. The U.S. Bankruptcy Judge Kevin Carey gave interim approval for the loan on Monday in Wilmington, Delaware. Wanxiang is actually replacing Johnson Controls as the lender for A123’s Chapter 11.
Johnson Controls withdrew as the lender to avoid a fight for the financing deal. A123 Systems is based in Waltham, Massachusetts and they filed for bankruptcy protection last month. A123 had plans to sell their automotive business assets to Johnson Controls for $125 million.
Wanxiang wanted to be the lead bidder for the auction of A123’s assets.
“Because of this potentially lengthy process, there is no guarantee that Wanxiang would obtain CFIUS approval even if the sale process were adjusted and extended,” stated A123.