By Katy Stech
Of DOW JONES DAILY BANKRUPTCY REVIEW
The U.S. Department of Energy is protesting the limits that Massachusetts
renewable electricity-storage company Beacon Power Corp. put on the agency's
ability to bid on the company's flagship power storage plant at a bankruptcy
auction.
In court papers filed Thursday, department officials asked a bankruptcy judge
to demand that the company make changes to its sale strategy to put the
department in a more favorable position to buy the plant at the company's
proposed January auction. The request raises the possibility that the
government would take control of the plant outside Albany, N.Y., which absorbs
extra grid electricity that can be put back into the power system later and on
quick notice.
The Energy Department already sits first in line to recover money from that
sale. The agency is owed about $39 million on a loan guarantee that Beacon
Power executives used to build the plant.
Agency officials want to be able to use that debt as currency that it could
put toward bidding at the auction for the plant, which the company has proposed
to sell on Jan. 25. The proposed auction plan, department attorneys said,
"impermissibly attempts to extinguish...limit and otherwise burden" the right
that it has to bid the full amount, according to documents filed with the U.S.
Bankruptcy Court in Wilmington, Del.
Agency officials also protested the long list of requirements that the
company put forth for bidders. That list would enable the company to throw out
bidders it doesn't consider fit to buy the plant.
A bankruptcy judge is expected to review Beacon Power's auction proposal at a
hearing Thursday.
Beacon Power executives never planned to hold the sale. They originally
intended to use the company's Chapter 11 bankruptcy case to reorganize the
business, perhaps by selling valuable patents and moving forward on building a
second storage plant outside Wilkes-Barre, Pa.
But the Energy Department said in court documents that it would have to pay
for those expensive reorganization efforts while the company's only operating
plant continued to incur losses of nearly $1 million each month.
The sale process is expected to recover a fraction of the department's loan
amount. The company valued the plant at about $12 million in its recent
quarterly filings with the U.S. Securities and Exchange Commission.
Beacon Power's publicly traded shares were suspended from Nasdaq on Nov. 10.
The company filed for bankruptcy on Oct. 30 after from spending more than
$200 million to develop technology that could recycle unused power left over
from conventional utility power grids. That technology has the ability to pump
the leftover power back into the electricity grid faster than traditional
sources, the company said.
The company, which employed about 65 workers at the time of the filing, holds
dozens of patents on its technology. It listed assets of $72 million and debt
of $47 million in its bankruptcy petition.
Beacon Power sought protection just days after officials in the Energy
Department's loan division--under sharp criticism in the wake of solar-panel
maker Solyndra LLC's bankruptcy--said they would stop funding Beacon Power's
loan.
By the time Solyndra filed for Chapter 11 bankruptcy protection in September,
it had also spend most of the $535 million loan that was guaranteed by the same
agency program, which used money from the 2009 economic-stimulus bill to
encourage renewable energy projects. Solyndra's loan guarantee created a
political firestorm because the department agreed to move behind other
creditors when Solyndra's debt was restructured in February.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and
those under bankruptcy protection.)
-Katy Stech, Dow Jones Daily Bankruptcy Review; 202-862-1344;
katherine.stech@dowjones.com
(END) Dow Jones Newswires
12-09-11 1404ET
Copyright (c) 2011 Dow Jones & Company, Inc.
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