Solyndra and VDL agree to settlement in encapsulation lines dispute

By Caroline Salls

Pittsburgh, Jan. 19 - Solyndra LLC has requested court approval of a settlement with VDL Enabling Technologies Group Eindhoven BV that would aid Solyndra's asset sale, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Background of the dispute

Under an equipment design and manufacturing agreement between Solyndra and VDL, VDL agreed to design, build and install two encapsulation lines in Solyndra's Fremont, Calif., facility.

At the time it ceased daily operations, Solyndra said it had paid VDL $32.57 million of the purchase price due under the agreement, and an additional $8.96 million was owed.

Although VDL has not yet filed a proof of claim in the company's bankruptcy case, according to Solyndra VDL has alleged that it is actually owed $12.66 million.

Solyndra said the encapsulation lines are among the property it plans to sell as part of its bankruptcy case.

However, VDL has opposed the sale motions, arguing that some of the equipment it brought to the Fremont location in connection with the line installation is VDL's property and cannot be sold.

VDL also claims that some of the software associated with the encapsulation lines is its property and was only licensed to Solyndra.

In addition, Solyndra said VDL has reserved the right to argue that the encapsulation lines themselves are its property because they were sold on an approval basis and the agreement was terminated before delivery was ever completed.

Settlement terms

Under the settlement, Solyndra will be allowed to move out of the rented facility that houses the encapsulation lines and to realize value for a portion of that property in conjunction with its pending auction plans.

VDL has also agreed to contribute its technical expertise to the disassembly of the lines, the motion said. All of VDL's work, supervision, advice and direction will be completed no later than Feb. 24 to dovetail with Solyndra's auction schedule.

The company said VDL has also agreed to withdraw its sale objections and consent to the proposed auction sale, as long as Solyndra adheres to the division of components and the sale does not include the VDL-owned equipment or software.

Solyndra said it estimates that the post-disassembly allocation of value will give it 60.6% of the value of the encapsulation lines, while giving VDL 39.4% of the value.

A hearing is scheduled for Monday.

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

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