Li-ion manufacturer Ener1 files pre-packaged Chapter 11 bankruptcy
26 January 2012
Li-ion manufacturer Ener1, Inc. has initiated a pre-packaged Chapter 11 bankruptcy case to implement a restructuring plan agreed on by its primary investors and lenders. Ener1 says the plan will significantly reduce its debt and provide up to $81 million to recapitalize itself to support its long-term business objectives and strategic plan.
In 2009, Ener1 subsidiary EnerDel received $118.5 million in federal grant funding under the stimulus package.
Ener1 filed its Chapter 11 case in US Bankruptcy Court in the Southern District of New York, in which it is requesting that the Court confirm the pre-packaged Plan of Reorganization to implement the restructuring. The Company filed a proposed Disclosure Statement and Plan of Reorganization with the Court and anticipates completing the restructuring process in approximately 45 days.
None of Ener1’s foreign or domestic subsidiaries has initiated reorganization cases, and are not expected to be adversely impacted by the legal proceedings. The restructuring plan provides for the continued normal operation of the subsidiary businesses, including EnerDel, EnerFuel, NanoEner, Emerging Power and Ener1 Korea, all of which will honor their customer commitments and will continue to pay their suppliers for goods and services as usual. Ener1 said its operating subsidiaries do not plan to reduce employment levels as a direct result of the filing, although they will continue to monitor market conditions and make adjustments to the workforce as appropriate.
The pre-packaged restructuring plan provides for a restructuring of the long-term debt and the infusion of up to $81 million of equity funding, which will support the continued operation of Ener1’s subsidiaries and help ensure that the restructuring will not adversely impact their employees, customers and suppliers.
Of this amount, a new debtor-in-possession (DIP) credit facility of up to $20 million will be available upon Court approval to support working capital needs during the restructuring. The balance, for a total of up to $81 million, will be available over the four years following Court approval of the restructuring plan and subject to the satisfaction of certain terms and conditions.
In addition to the restructuring of long-term debt, the claims of Ener1’s general unsecured creditors will be unimpaired and paid by the Company under the restructuring plan. Under the plan, all of Ener1 existing common stock will be canceled, the long-term debt holders will be receiving a combination of cash, a new term loan and new common stock in exchange for their claims, and new preferred stock will be issued to the provider of the post-petition and exit funding.
Suppliers to the Company will be paid under normal terms for goods and services provided after the Chapter 11 filing date. Payments for goods and services provided directly to the Company prior to the filing date have been previously settled or will be paid pursuant to the restructuring plan when it is approved by the Court.
On 12 December 2011, Ener1 common stock was delisted from NASDAQ. Pursuant to the plan, that common stock will be extinguished at the conclusion of the reorganization case and current equity holders will not receive any distributions.
Ener1’s legal advisor is Reed Smith LLP and its financial advisor is Houlihan Lokey Capital, Inc.
That legal robbery of people's savings is exactly the type of capitalism that will eventually ruin the national economy. The time has arrived to clean up capitalism and capital firms administration.
Posted by: HarveyD | 26 January 2012 at 01:01 PM
"In 2009, Ener1 subsidiary EnerDel received $118.5 million in federal grant funding under the stimulus package." Of course they did! We wouldn't of thought otherwise! And somewhere there are, most likely, Obama political donors in the mix....
Posted by: ejj | 26 January 2012 at 04:00 PM
how many millions of $$ in sales does this company have?.. and who is buying their batteries?
Posted by: Herm | 26 January 2012 at 06:44 PM
The failure of this company should not come as a surprise to anyone. In fact earlier this year I wrote a 2-Part story titled "With the failure of the electric car concept in America what impact will this have on the lithium ion battery global supply chain?" that provides an in-depth look at the sector.
What is interesting is that this recent failure has little to do with failed policy per say, and more to do with the public's unwillingness to end its longtime love affair with fossil fuel.
Here are the links to Part 1 (http://wp.me/p4HrB-2Xa) and Part 2 (http://wp.me/p4HrB-2XM).
Posted by: Jon Hansen | 27 January 2012 at 06:39 AM
Half the people commuting in L.A. could drive electric cars and maybe some day they will. It would reduce oil imports, clean the air and save the drivers money.
Posted by: SJC | 27 January 2012 at 08:19 AM
According to CBS the company could not compete with China and other countries with cheap labor and unfair trade practices. This is similar to what happened to the solar panel company. If China wants to dramatically reduce their prices allowed by their cheap labor they can at any time.
Posted by: SJC | 27 January 2012 at 10:16 AM
So in this chapter 11 bankruptcy, they will pay all their debt, continue to operate, and won't lay anyone off. They do go from being a publically traded corporation to a private company. The only people getting shorted are the small shareholders who will get only a fraction of their original investment. They will continue to make batteries and because they have reorganized their debt, they will be profitable sooner than expected. The people of CBS are morons. Electric cars will not fail. Think! auto was their major customer, and the failure of Think! is what is causing them this strain right now, but they will recover. HD is correct, because it was the small investors who lost, but then you should not gamble on little companies with more than play money. On the other hand, this is how Mitt Romney makes his money, ripping off the small investors.
Posted by: Brotherkenny4 | 27 January 2012 at 10:59 AM
EnerDel had other contracts besides Think, but could not keep them in view of the competitors price reductions. They need to come way up on the automation economy scale to compete and it is a bit early in their development for that.
"Alex Sorokin, the CEO for lithium-ion battery manufacturer Ener1, said the company suffered when demand for the batteries dropped as fewer Americans than expected opted for electric cars."
http://abcnews.go.com/Blotter/ener1-parent-obama-backed-green-company-files-bankruptcy/story?id=15456414
Posted by: SJC | 27 January 2012 at 12:00 PM
"Analysts have also said any electric car battery maker faces stiff competition from Asian firms, which are largely considered to be well ahead of the curve due to their long experience making batteries for electronics. Ener1 was thought to offer one of the best chances for an American company to compete in this field."
http://money.cnn.com/2012/01/26/technology/ener1_bankruptcy/index.htm
Posted by: SJC | 27 January 2012 at 12:08 PM
If factory workers income tax burden was reduced to 0% for the first $50K to $60K earned every year, lower wages and fringe benefits could be paid and they could become more competitive. Of course all others would have to pay more income tax, specially those with higher revenues.
Posted by: HarveyD | 27 January 2012 at 12:36 PM
I was one of the small investors in Ener1 but had sold my stock at a loss several months ago. I think that I paid about $4 a share and sold for 0.05. Am I mad -- not really. I knew it was a risky investment and was a flier. I have made much more on other stocks than I have lost. Some of the gainers were also what I would consider fliers while others were more stable companies. I also had GM stock a few years ago not believing that they would go bankrupt but again it was a loss that I could afford and was offset by gains elsewhere.
Posted by: sd | 27 January 2012 at 05:45 PM
Buying Ford at $2 and selling at $12 would have been a good deal. It was not clear at that time if they would make it or not.
Posted by: SJC | 27 January 2012 at 07:54 PM
One of the early things we discussed here was an electric car running out of push at an inconvenient time and/or place.
There needs to be done a monster of a selling job if we ever expect to see even moderate acceptance by drivers in the USA.
Even then, many fuelheads wouldn't even look at a quiet vehicle.
Posted by: Lucas | 27 January 2012 at 07:59 PM
No one wants to run out of fuel nor electricity. A fuel gauge tells the driver how much fuel is left and a SOC indicator tells how much energy is left. The one difference is there are fueling stations where you can get more in a few minutes.
This was not the case in the early days of driving, there were few fueling stations and few paved roads. The industry and market has been built over 100 years, it may take a while for people to feel comfortable with EVs.
Posted by: SJC | 28 January 2012 at 10:21 AM
Yes SJC...it will take another decade or so to market affordable electrified vehicles with 100+ KWh compact quick charge batteries with comparable range to current ICEVs.
The short, middle and long term problem is how could we manufacture all those batteries in local factories. Otherwise, we will go from imported Crude Oil to imported Batteries.
One way to make it possible for the 95% non-millionaire majority to buy electrified vehicles and create local jobs by doing so would be with a Fed-States programs to finance the purchase (at the rate of 10% to 100% based on the buyers revenue) of locally manufactured batteries for HEVs, PHEVs and BEVs bought by people making less than $100k/year.
Posted by: HarveyD | 28 January 2012 at 12:14 PM
I really think that it is a state of mind situation. Once people find out that 100-150 mile range is far enough to commute, then no problem. Since the energy costs much less than gasoline, the air is cleaner and we import less oil, it will be THE thing to do.
Posted by: SJC | 28 January 2012 at 01:17 PM
HarveyD: What you say is correct about importing batteries, but it misses an important point. That is a one time purchase. The energy to drive the car is a daily or weekly purchase. I spend a whole lot more on gas than I do on the battery in the car.
Posted by: JMartin | 28 January 2012 at 05:47 PM
Gasoline for the first 5 years can cost the owner $10,000. Electricity for 5 years in an EV might be $2,000. After 5 years, the battery may still have 3-5 years of usable life in the EV. If it is 5 years more, the owner has saved $16,000 over the ten year span and can afford a new battery pack with the money saved. He has traded battery cost for imported oil cost and eliminated a lot of smog in the process.
Posted by: SJC | 29 January 2012 at 08:00 AM