Solyndra Reportedly Violated The Terms Of Its Government Loan

More news about Solyndra and the apparent favoritism it received at the behest of the Obama Administration:

Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter.

The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.

The Energy Department ultimately restructured the loan agreement to help keep the company afloat and Solyndra continued to draw money from its loan.

Solyndra’s cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.

The company’s financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

Now it’s worth noting that many of these moves are not at all unusual in high stakes commercial lending, although a lender who restructures a loan and subordinates debt typically gets something in return for it like a Personal Guaranty. Unusual or not, though, it’s just another one of those things that is going to lead to questions about this entire deal and, in a political context, it just doesn’t look good, especially given the political connections between Solyndra’s ownership and the Obama White House.

In other news, the linked article goes on to note that Solyndra’s assets will be sold at auction next month. Anyone want to guess how many pennies on the dollar Uncle Sam is going to get out of this one?

FILED UNDER: Barack Obama, Economics and Business, Politicians, Quick Takes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Sam says:

    If anyone thought the FBI raids on the offices and homes of Solyndra execs were to gather evidence, I have some carbon credits to sell you.

    It was a search and destroy raid, nothing more.

  2. @Sam:.

    So now you’re accusing career FBI agents of conspiracy and other crimes?

    You better have evidence to back up that slander

  3. Sam says:

    @Doug Mataconis:
    Under this dictator, you bet!
    Attempting to get a 4 Star General to change his congressional testimony, and another to do the same.
    Gibson. Ford. Fast and Furious. GM bond holder debacle.

    I would not put anything past this man and his Chicago gang of thugs.

  4. john personna says:

    @Sam:

    Heh, if you wanted to show there are things crazier than the Solyndra deal, you did it.

  5. Jay Tea says:

    When I read Sam’s first comment, I said “no doubt about it, this guy’s nuts.”

    Then I read his second comment, and my certainty is down to 98%.

    J.

  6. Sam says:

    The same FBI that was “tracking walked firearms”?

  7. Sam says:

    @Jay Tea:
    I am no more nuts than many of the bottom feeders here!

  8. Sam says:

    “Six years ago, Senate Finance Committee investigators mounted an inquiry into an exotic variety of nonprofit organization that they feared affluent families were using to warehouse wealth while simultaneously earning themselves lucrative tax breaks.

    One nonprofit group singled out for scrutiny was a low-profile organization based in Tulsa. That group, the George Kaiser Family Foundation, later became the biggest investor in Solyndra, the solar company that collapsed last month after burning through a half-billion dollars in taxpayer money.
    Congressional interest in the nonprofit group was so high in 2005, in fact, that an attorney for then-committee Chairman Charles E. Grassley (R-Iowa) used it in an internal memo as a case study into whether the tax loophole should be closed. The memo, previously unreported, pointed out that in 2002 the foundation distributed just 0.2 percent of its assets to charity. That was acceptable under the law because GKFF, as it is known, was founded to financially “support” another nonprofit group, the Tulsa Community Foundation. ”

    http://www.washingtonpost.com/politics/investment-in-failed-solar-firm-solyndra-raises-questions-about-nonprofits-purpose/2011/09/27/gIQAVByZ2K_story.html

    This is deeper than the Marianas Trench.

  9. Moderate Mom says:

    @Sam:

    The GKFF is looking a little more fishy every day. And color me shocked to find out that this”Foundation” doesn’t actually give out a lot of money to charitable causes. Instead, it’s primary purpose seems to be tax planning for Mr. Kaiser. Wow, another Democratic billionaire going above and beyond to avoid the Estate Tax.

  10. WR says:

    @Moderate Mom: It is shocking indeed to find out that the KFF doesn’t give out a lot of money to charitable causes. Unless you actually spend two seconds to find out that they don’t exist to give out money. They fund and publish research on health care issues. Of course, they are particularly interested in health care issues relating to people with low incomes or who are especially vulnerable to health care costs, so it’s no surprise to see that those who get all their information from Rush and company are now attacking the foundation.

    By the way, the foundation was founded in 1948 by Henry J. Kaiser, who died in 1967. So he must really be going above and beyond to avoid the estate tax, since it was levied on the half he left to his wife 44 years ago…

  11. legion says:

    Ten bucks says Sam, ModMom, and WR are all the same person…

  12. Neil Hudelson says:

    @legion:

    Umm, why WR?

  13. Moderate Mom says:

    @WR:

    My info didn’t come from Rush Limbaugh, it came from the Washington Post. Here is the link: http://www.washingtonpost.com/politics/investment-in-failed-solar-firm-solyndra-raises-questions-about-nonprofits-purpose/2011/09/27/gIQAVByZ2K_story.html

    The George Kaiser Family Foundation (GKFF) is not associated with the Kaiser Foundation. They are two completely separate entities and have nothing to do with each other. Do you ever look into something before spouting off completely wrong information? Or do your ideological blinders prevent you from doing so? Perhaps it would help if you got your information from somewhere other than the Center for American Progress, Media Matters, or some other KozKid favorite.

  14. Moderate Mom says:

    @WR:

    Here is the link to the home page of the GKFF:

    http://www.gkff.org/index.php?page=home

    I forgot to include it in my previous response to you.

  15. legion says:

    @Neil Hudelson: Something about that last exchange just looked scripted to me. Looking at the later comments, I may revise that to a guess that ModMom is a chatbot of some flavor… My apologies, WR.