IRS calls Solyndra Chapter 11 plan a tax scheme, files appeal notice

By Jim Witters

Wilmington, Del., Nov. 2 - The Internal Revenue Service has appealed the confirmation of Solyndra LLC and 360 Degree Solar Holdings, Inc.'s plan of reorganization, according to documents filed Nov. 1 with the U.S. Bankruptcy Court for the District of Delaware.

Judge Mary F. Walrath confirmed the plan on Oct. 22 over objections by the IRS, which claims the bankruptcy is merely a means for Solyndra's lenders Argonaut Ventures I, LLC and Madrone Partners, LP to avoid taxes.

IRS attorneys said the main goal of the plan was to preserve about $1 billion in accumulated net operating losses (NOLs) and general business tax credits.

Walrath rejected the IRS argument after a lengthy hearing, saying in her ruling that the government agency failed to prove that tax avoidance is the primary aim of the reorganization plan.

Walrath said "it is very clear" that the bankruptcy and the plan deal with many things besides the NOLs.

Representatives of the lenders said they plan to fund the reorganized company to buy or start a business that can use the tax credits and NOLs.

The tax breaks could amount to about $340 million, attorneys said.

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 under Chapter 11 case number 11-12799.

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