Fisker wants U.S. court to delay A123 bankruptcy auction
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WILMINGTON, Del. (Bloomberg) -- Luxury hybrid automaker Fisker Automotive Inc. asked a bankruptcy judge to delay the auction of U.S. electric-car battery maker A123 Systems Inc.
“A hurried sale process will be damaging to the estates and deprive creditors of value that may be realized through higher and better offers,” Gregg Galardi, a Fisker attorney, said in court papers filed today in Wilmington, Del.
Fisker, based in Anaheim, Calif., also said today it would file an “emergency motion” challenging a so-called debtor-in-possession loan, and didn’t provide details.
Fisker is seeking an extension of the bid deadline, auction date and related dates and deadlines in the bidding procedures request by at least 30 days, court papers show.
A123, the recipient of a $249 million federal grant, said it would sell its automotive-business assets to Johnson Controls Inc. in a deal valued at $125 million. The deal is subject to other potential offers in a bankruptcy auction. A123, based in Waltham, Mass., listed assets of $459.8 million and debt of $376 million as of Aug. 31 in Chapter 11 documents.
A123, which is scheduled to return to court next week to seek approval of the remainder of a $72.5 million loan, intends to file court papers seeking interim approval of a replacement debtor-in-possession facility from Wanxiang America Corp., according to court documents filed today. The company on Oct. 18 won interim court approval to borrow as much as $15.5 million in DIP financing from Johnson Controls.
'Various protections'
The auto company said it doesn’t oppose the need for an asset sale, just “various protections” for Johnson “that are unnecessary, excessive, and counterproductive to a successful sales process,” including a possible $7.75 million breakup fee and expense reimbursement.
The proposed procedures and protections were “crafted” for the benefit of Johnson Controls, Galardi said. “The best interests of the estates, however, are not well served through a hasty and unfair sale process designed to ensure that JCI is the ultimate purchaser,” he said.
In January 2010, A123 and Fisker signed a multiyear supply agreement for Fisker’s Karma plug-in hybrid electric luxury car. A123’s obligations under the supply accord, including warranty obligations, “give rise to substantial unsecured claims” in favor of Fisker that may exceed a total of $100 million, according to court papers.
Trustee objection
Also today, U.S. Trustee Mark Kenney filed an objection to the breakup fee, saying it can’t be characterized as “actually necessary to preserve the value of the estate.”
In another objection today, patent owners including the University of Montreal asked a judge to consider the value of their exclusively licensed patents for lithium battery technology and the rights of A123 to keep or transfer them in the sale.
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