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Summary:

Here comes just the beginning of the fall out of solar company Solyndra’s bankruptcy: a class action lawsuit from employees, and disturbing details about how the government put a chunk of private funds in front of government loans during a refinancing of Solyndra earlier this year.

Workers inspecting panels in Solyndra's factory in April

Workers inspecting panels in Solyndra's factory in April

Here comes just the beginning of the fall out of solar company Solyndra’s planned bankruptcy, which it announced last week after receiving hundreds of millions of dollars in loans from the federal government and a billion dollars from private investors. According to the San Francisco Business Times, Solyndra has been hit with a class action lawsuit from employees for violating laws that require companies to give 60 days notice before laying off more than 50 workers. In addition, some ugly details are starting to emerge, via Bloomberg, about the Department of Energy’s refinancing efforts of Solyndra, which essentially put a chunk of private investors funds ahead of the government (taxpayers) loans when they were to be paid back.

Class action lawsuit

Up first: the class action lawsuit. Filed in the U.S. District Court of Northern California on Friday night by plaintiff and Solyndra former employee Peter Kohlstadt, the suit claims that Solyndra broke the Worker Adjustment and Retraining Notification or WARN Act, which requires that companies give 60 day warning before laying off 50 or more workers.

As Business Times reporter Lindsay Riddell notes, an exception to the WARN Act is if a company is actively trying to get more funding to keep the business going up until it falters, then it doesn’t have to give 60 days notice. A Solyndra spokesperson tells Riddell that the company was trying to raise new funding up until the last minute.

Anger is to be expected from former employees. The company seems to have given really no indication to its workers at all that there was trouble brewing. To note: 1,100 former Solyndra workers were abruptly let go last week.

Disturbing refinancing details

Solyndra's Factory

And now for some truly unsettling information, which is sure to set Republicans up in arms. According to Bloomberg, citing a government document, the Department of Energy, which approved Solyndra for $535 million in loans, let $385 million of its loans take a back seat to funds from private investors during a refinancing round of Solyndra earlier this year. Bloomberg says that in January 2011, private investors gave Solyndra another $75 million to try to stop it from going bankrupt, and that $75 million became senior debt that ensured it would be paid back ahead of $385 million in federal loans.

When Solyndra was refinanced, the DOE had already given it $460 million in loans, and decided to reinvest to help the company avoid bankruptcy, reports Bloomberg. Solyndra also gave the government more collateral, including intellectual property, and Bloomberg quotes the government document that says as of December 2010:

Solyndra had only about a month of cash on hand and faced bankruptcy absent continued funding from the department.

At that time in December 2010, Solyndra was valued at worth $91 million to $99 million in liquidation before the refinancing, or less than a 22 percent return to the government, says Bloomberg. Also read Neal Dikeman’s analysis of how much investors and the government could get out of a Solyndra liquidation (warning: it isn’t pretty).

  1. Using $500M in public funds to back a complicated technology like evacuated glass tubes to compete economically with flat sputtered PV is looney. That’s almost as dumb as using public money to back ethanol made from fermented corn to compete with gasoline. Oh, wait …

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    1. Silicon_Cowboy Sunday, September 4, 2011

      Never met top management, don’t know about the funding. Evacuated glass tubes are everywhere = fluorescent lights. (and before that, Edison’s incandescent – 100+ years of lighting the night w/o having to build a fire) Put electricity in, get light out. Solyndra found a way to reverse that = put sunlight in, get electricity out. I worked there – 6 temp jobs, 3 locations – last year. Some of the most dedicated and capable people I’ve met. Crazy schedule – they ran 12 hour shifts = ouch. Plant ran 24/7, as one Mgr said “This train never stops”. Until now. They were ramping up = huge new building, lots of industrial robots + high tech gadgets. My take is they got torpedoed by the Economic Downturn (recession, depression, whatever). That great crew was turning out product as fast as they could, and could not keep up w/ demand. I am certain that if Wall Street had not Melted Down, they would have turned a profit, repaid all funding.
      BTW = I know evacuated glass tubes – back in 70s, I helped build and test the Space Shuttle’s dashboard lights. And before transistors and ICs (1914 – 1960s?) most electronics ran on “Vacuum Tubes”. Still prized in amplifiers = warmer sound.

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  2. This sounds like a total SCAM to drain the DOE (and the US Taxpayer) of half a Billion Dollars.

    Period.

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  3. “And now for some truly unsettling information, which is sure to set Republicans up in arms.” Probably you are right–Democrats do seem very tolerant of government waste and fraud, almost as if it is intended.

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    1. No. It’s just that the Republican’ts are over dramatizing the same things that they did for many many years as if they never did them in the hope of distracting us with something shiny while they rewrite history.

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  4. A scam? I’m sure the plant in KY that’s coating the parts or the plant in Wisconsin that’s assembling the parts or the company in UK that’s selling the coatings, or the company in Indianapolis that’s warehousing the coatings would disagree….thousands more are involved than just the employees in Fremont…..

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  5. You might want to read the california labor code 1402.5, which is the law depicting all exemptions allowed. simply scan down to the last paragraph. d) This section does not apply to notice of a mass layoff as defined by subdivision (d) of Section 1400. (which defines mass layoffs, which is what solyndra closing its doors counts as) So under the law, solyndra owes all employees 60 days wages and cost of benefits.

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  6. You might want to read the california labor code 1402.5, which is the law depicting all exemptions allowed. simply scan down to the last paragraph. d) This section does not apply to notice of a mass layoff as defined by subdivision (d) of Section 1400. (which defines mass layoffs, which is what solyndra closing its doors counts as) So under the law, solyndra owes all employees 60 days wages and cost of benefits.

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  7. Silicon_Cowboy Sunday, September 4, 2011

    With the Global Economy, everything affects everyone. Condolences to all = KY, WI, IN, UK. Don’t forget the workers in Germany that made those glass tubes. The BMWs of Silicon DiOxide Cylinders. Shared a room where they were tested = *very few* failures. Lost a major contract, many will need to find a new job. And it was / is a good technology – All those flat panels have the “wing effect”. Had to be bolted into the roof to avoid Lift-off”. Solyndra’s product did not need bolt down, had neutral lift. (I spent 2 days, 2 stories up “test installing” = been there, done that – dang, I forgot to get the T-Shirt). The first gen product was good, selling well. Second gen was killer – more stable, sturdy, etc. (borrow a line from Chevy Ads = Like a Rock). Competition was big time scared.

    Hope they get their financial stuff together, rehire those 1100 Locals, everybody else in the supply chain gets their jobs back.
    *HUGE* new couple of buildings, right off Hwy 880, filled w/ so many specialized High Tech Toys, and so many trained / experienced in how to make it all work – Why shut it down?

    Please consider – you’re making a product that sells so well, you can’t make them fast enough to keep up w/ demand. Company endorsed financially and PR by the Feds. Economy hits a little (OK – we don’t know how big) bump in the road. And you “throw in the towel” and toss all the crew (that worked so hard) to the curb, and cancel the contracts of all the suppliers. ??WTF??

    This is *very green* tech. No propeller blades – like wind energy, killing a few birds, or similar ocean wave tech, killing a few fish. Making these panels is very low impact, and after install – they just sit there on industrial roofs, soaking up sunlight, producing electricity. No oil drilling off the coast, no noxious exhaust gasses, no “carbon footprint”, almost no downside to this at all.

    I don’t care if the Feds have to take it over to keep it running – this is a good thing for the Economy and the Environment = a “Pure Play”. Would cost much less than keeping “too big to fail” banks floating.

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  8. Just ask the Republicans what we got for the $3.7 Trillion we have spent on their wars for Oil ? The only thing that comes to mind is a “Mission Accomplished” Carrier Landing Moment

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