Solyndra: No misconduct allegations in trustee appointment motion

By Caroline Salls

Pittsburgh, Oct. 12 - Solyndra LLC objected to the U.S. Trustee's motion for appointment of a Chapter 11 trustee to oversee its bankruptcy case, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said U.S. Trustee Roberta A. DeAngelis changed her original motion to eliminate an alternate recommendation that the court convert Solyndra's bankruptcy case to Chapter 7.

In the objection, the company claims that the trustee appointment motion is "cut from the same cloth" as impressions that management misdeeds were to blame for a default on a Department of Energy loan and that "Solyndra's bankruptcy was a hostile act."

Solyndra said these impressions stemmed from an unannounced but televised raid on its offices by armed FBI agents in bulletproof vests three days after the bankruptcy filing.

Solyndra said there were no allegations of any irregularities in its management and operations before the bankruptcy filing. The company said it "maintained a high level of transparency with its sophisticated creditors making full financial disclosures and opening itself to close scrutiny."

"Speculation and innuendo began only when Solyndra's bankruptcy became a political spectacle," the company said in the objection.

The company said the U.S. Trustee alleges no misconduct of any kind in a motion normally reserved for cases involving clear evidence of fraud, gross mismanagement or breach of fiduciary duty.

Instead, Solyndra said the U.S. Trustee feels a Chapter 11 trustee is needed because the company followed the advice of counsel and invoked its Fifth Amendment right not to testify before a Congressional subcommittee in the wake of the FBI raid.

The company said it will still make required disclosures, and it has already told the U.S. Trustee that it would.

Echoing an objection to the trustee appointment filed earlier this week by its official committee of unsecured creditors, Solyndra also said the trustee appointment "will almost surely devastate the prospects of a turnkey sale."

Solyndra is a Fremont, Calif.-based manufacturer of cylindrical solar photovoltaic systems for large industrial and commercial rooftops. The company filed for bankruptcy Sept. 6. The Chapter 11 case number is 11-12799.

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