Fisker seeks to delay bankruptcy sale of A123 Systems assets
The bankruptcy and sale of A123 Systems' assets to the highest bidder could disrupt the businesses of A123's customers, such as Fisker Automotive. Fisker has asked the bankruptcy judge to delay the auction of A123 Systems, calling it a hurried sale process. Fisker uses battery packs manufactured by A123 in the Fisker Karma.
"A hurried sale process will be damaging to the estates and derive creditors of value that may be realized through higher and better offers," wrote Gregg Galardi, a Fisker attorney, in court papers filed on Friday in Wilmington Delaware. Fisker is also expected to file an emergency motion challenging the debtor-in-possession loan to A123 from Johnson Controls. The motion seeks an extension of bidding deadlines, related dates, and deadlines in the bidding procedures request.
A123 Systems has had a rough year with problem after problem, the most significant of which was battery pack recalls after finding quality problems in the packs. The recall cost the company $55 million blowing a hole in the middle of its financial balance sheet from which it could not recover. In June A123 did warn that the company might cease as a going concern, and finally in mid-August the company reached a rescue deal with Wanxiang, the Chinese autoparts maker, who would buy out A123. Less than two weeks ago A123 backed out of the deal with Wanxiang, and entered into a deal with Johnson Controls in which JCI would buy most of A123's assets and technology. See A123 Systems veers from Wanxiang to Johnson Controls and bankruptcy for all the details.
Fisker's role in this is as A123's major customer. Delays in Fisker's production plans made it doubly hard for A123 to get a solid financial footing, because the promised ramp-up of production for Fisker's Atlantic never occurred.
The sale of A123's assets to Johnson Controls is contingent on other offers that may be made.