A123 Systems Files for Chapter 11

A123 Systems, which received a grant of $249 million from the government of the U.S., announced on Tuesday it was filing for bankruptcy protection. The announcement gives Republican presidential nominee Mitt Romney yet another reason to take aim at the White House administration’s subsidies program for green energy.

The U.S. Energy Department allotted over $90 billion for a number of different programs for clean-energy through the stimulus package of the White House administration. Of that total, nearly $813 million was given to different energy companies that would eventually file for bankruptcy protection. Those companies include EnerDel, Abound Solar, Beacon, Solyndra and now A123.

The bankruptcy filing by A123 comes at a time when President Obama and his challenger Romney are preparing for the second presidential debate Tuesday night.

A123 Systems said it had entered into an agreement to sell the automotive operations, which includes two Michigan factories to battery supplier Johnson Controls, Inc. for an estimated $125 million. That followed the apparent collapse of a rescue plan that had been estimated at $465 million by Wanxiang Group of China.

In return for receiving the government funding, A123 promised to create more than 38,000 jobs in the U.S., including another 5,900 in its plants.

Johnson Controls is a supplier of lithium-ion batteries for many vehicle manufacturers and received a grant of over $299 million under the same program that A123 received its grant.

Romney, during the first debate attacked Obama’s green technologies promotion, saying the White Administration, in giving out billions of dollars to green energy companies and had only chosen losers.

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