Solyndra's amended reorganization plan draws objection from trustee

By Jim Witters

Wilmington, Del., Oct. 10 - The U.S. trustee objects to the confirmation of Solyndra LLC and 360 Degree Solar Holdings, Inc.'s amended plan of reorganization, according to documents filed Oct. 10 with the U.S. Bankruptcy Court for the District of Delaware.

Roberta A. DeAngelis, the trustee for Region 3, says there is no evidence the holding company will be doing business after consummation of the plan, that the holding company is not entitled to a discharge under the bankruptcy code and that both debtors are liquidating their assets.

The plan confirmation hearing is scheduled for 11:30 a.m. ET on Oct. 17.

Specific objections

The trustee's objections include:

• The holding company is not entitled to a discharge.

The plan provides that the holding company debtor will be "reorganized," while its operating subsidiary, Solyndra, will be liquidated.

"Holdings is a corporate debtor that would not be entitled to a discharge," the trustee said.

• The debtors are liquidating all or substantially all of their assets.

"Although the plan provides that Holdings' remaining assets will vest in reorganized Holdings after the effective date, the only assets that appear to be left after distributions to creditors are net operating losses ... and litigation claims," the objection stated.

"The NOLs are not an asset that can be monetized to make distributions to creditors; rather, their only value is in reducing future tax liabilities. In order to reduce future tax liabilities, Holdings must have income to offset the losses."

• The debtors have not shown that the holding company will actually be engaged in business after consummation of the plan, the trustee said.

The debtors' disclosure statement includes the intent to market the holding company in a manner that will enable the owners to make use of $875 million to $975 million of net operating losses.

"This is not a true 'rehabilitation' plan, but rather, the retention of a corporate shell which happens to have NOLs that the plan sponsors and existing equity holders intend to use for their own benefit. In order to make use of the remaining corporate shell and its past losses, Holdings will have to acquire or merge with another business that has an operating business. As of this date, Holdings admits that it has not identified any assets or business with which it will merge," court documents stated.

The disclosure statement contains no information about where the holding company will conduct business or what the business might be.

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, 2011. Its Chapter 11 case number is 11-12799.

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