After warning yesterday that it might default on several debt payments, troubled battery maker A123 Systems has filed for bankruptcy protection in federal court in Wilmington, Delaware.
The company listed total assets of $459.8 million and debt of $376 million as of August 31, according to its Chapter 11 petition. It didn’t expect to be on time with an interest payment due yesterday on $143.8 million of notes expiring in 2016, and also suggested that it would miss a payment due yesterday on $2.76 million in outstanding 6 percent notes.
"The company may not have sufficient cash to fund operations and may need to seek the protections provided under the U.S. Bankruptcy Code," A123 said.
Founded in 2001, Massachusetts-based A123 produces rechargeable lithium-ion battery packs and has contracts with Fisker, BMW, Tata Motors and General Motors. The company, which received a $249.1 million federal grant in 2009 to build a U.S. production facility, has been strongly impacted by slower than expected sales of electric vehicles and a costly recall of the Fisker Karma’s batteries.
A123 said yesterday that it is “considering a broad set of strategic alternatives to address its liquidity constraints.” A123 announced in August that it had laid the framework for a deal in which China’s largest auto-parts maker, Wanxiang Group Corporation, would invest up to $465 million in the battery maker in return for a majority ownership stake.