WILMINGTON, Del. -- Solyndra, the Fremont solar panel maker that failed despite a $528 million federal loan, on Monday won court approval for its plan to repay creditors and end its politically charged bankruptcy, after a judge overruled objections by the U.S. government and other entities, including Alameda County.
U.S. Bankruptcy Judge Mary Walrath in Delaware rejected the U.S. government argument that the plan was improper because its main purpose was to provide tax breaks.
Venture capital firms Argonaut Private Equity and Madrone Capital Partners will control Solyndra's tax breaks, known as net operating losses or NOLs, that are potentially worth $341 million after the bankruptcy.
"It is clear in this case the bankruptcy and the reorganization dealt with many other things than the value of the NOLs or the preservation of the NOLs," said Walrath on Monday at a hearing in Wilmington.
Anne Oliver, an Internal Revenue Service lawyer, told the judge that the government may appeal. Walrath granted her request to delay the repayment plan by 10 days.
The plan calls for Argonaut and Madrone to take control of Solyndra's parent company, which will have no employees or operations but hold about $1 billion of net operating losses.
Argonaut and Madrone plan to use the company as a vehicle to make investments or buy businesses, and apply those losses against potential future
Ordinary creditors may not fare as well. Despite selling nearly all its assets, Solyndra expects most creditors to recover 3 percent or less of what they are owed, far less than in a typical corporate bankruptcy.
Creditors include Alameda County, which is due property taxes for Solyndra's gleaming Fremont headquarters, visible from Interstate 880. Solyndra is attempting to sell the solar equipment factory to Seagate Technology for $90.3 million, a deal that Cupertino-based Seagate hopes to complete by early 2013.
"The reorganization plan grossly understates the property taxes due" for Solyndra's properties, the Alameda County Tax Collector claimed in documents filed with the Bankruptcy Court in Delaware. The county added, "The plan fails to state that Alameda County is entitled to 18 percent interest on its secured property tax claim."
Solyndra's bankruptcy case continued to generate political heat on Monday, just 15 days before U.S. elections.
Rep. Darrell Issa, a California Republican and chairman of the House Oversight and Government Reform Committee, invoked Solyndra in a letter on Monday to Energy Secretary Steven Chu seeking documents relating to Fisker Automotive, maker of the Karma plug-in hybrid car.
Like Solyndra, Fisker received a government loan through a clean energy program. Issa demanded reassurances that the Department of Energy took steps to protect those taxpayer funds.
Solyndra filed for Chapter 11 protection from creditors on Sept. 6, 2011, as it and other solar panel companies were hurt by a flood of cheap imports from China that drove down prices.
The company had received the $528 million loan as part of a government program to promote clean energy. Its collapse sparked an 18-month investigation by Republicans who faulted President Barack Obama's administration for failing to cut the government's losses.
Republicans accused the administration of making the loan in part as a favor to George Kaiser, the billionaire founder of Argonaut and a fundraiser for Obama's 2008 presidential campaign. The White House has called the decision to make the loan "merit-based."
Bay Area News Group reporter George Avalos contirbuted to this report.