WILMINGTON, Delaware (Bloomberg) -- B456 Systems Inc., the bankrupt electric-car battery maker formerly called A123 Systems Inc., won court approval of a plan to exit bankruptcy that pays creditors from the proceeds of selling virtually all its assets.
U.S. Bankruptcy Judge Kevin Carey approved the company's plan after most objections were resolved prior to today's hearing in Wilmington, Delaware.
"We are thrilled with the result, and believe it's in the best interest of creditors," Caroline A. Reckler, a lawyer for the company, said in an interview after the hearing.
Reckler told Carey that creditors voted "overwhelmingly in favor of the plan."
With an approved plan, B456 expects to exit court protection in about three to four weeks, bringing an end to a bankruptcy that sparked heated political debate over government support for companies in nascent alternative-energy industries.
A123 was used as an example by 2012 Republican presidential nominee Mitt Romney to attack President Barack Obama on what he called the administration's failed investments in so-called green technology.
Following A123's bankruptcy filing, Andrea Saul, a Romney campaign spokeswoman, said in an e-mail the company was "yet another failure for the president's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work."
The Waltham, Mass.-based company filed for bankruptcy in October after a proposed $465 million deal with Wanxiang Group Co., China's biggest auto-parts maker, for an 80 percent stake was scuttled amid congressional Republicans' reluctance to allow a sale to a Chinese company.
A123, which was awarded a federal grant of as much as $249.1 million and only used about $132 million to build two plants in Michigan, listed assets of $459.8 million and debt of $376 million as of Aug. 31 in court documents.
A123 got court approval Dec. 11 to sell the majority of its assets to Wanxiang's U.S. unit after it won an auction, beating out the original proposed buyer, Milwaukee-based Johnson Controls Inc.
Wanxiang America Corp. acquired substantially all of A123's automotive, grid and commercial business assets for about $256.6 million.
The deal received approval from the Committee on Foreign Investment in the U.S. on Jan. 29.
CFIUS, as it is known, is a federal interagency group led by the Treasury Department that reviewed the sale after members of Congress expressed national security concerns over allowing a foreign competitor to obtain the technology developed with government backing.
A123 and Wanxiang tried to mollify congressional anxiety by excluding the battery maker's government business from the deal.
It was sold to Woodridge, Illinois-based Navitas Systems LLC for about $2.25 million.
Under the company's plan, general unsecured creditors are projected to recover between about 32.7 percent and 63.6 percent of what they're owed, an amount which hasn't yet been determined, according to court documents.
The company reached agreements with some creditors reducing the amount they are owed, including a settlement with Fisker Automotive Inc., which was its main customer, reducing its purported $140 million in claims by 89 percent to $15 million.
As part of the settlement, Anaheim, Calif.,-based Fisker agreed to support the former battery maker's liquidation plan.
If objections to claims are successful, "then the estimated percentage recovery for general unsecured creditors would be 63.6 percent," A123 said in the disclosure statement, an outline of the plan approved March 14.
Likewise, unsecured subordinated noteholders recovery on about $146.4 million in claims would rise to 62.9 percent from the current estimate of a 31.3 percent recovery if the claims objections are accepted by the court.
Unsecured senior noteholders are expected to be paid in full.