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IRS Objects To Solyndra Bankruptcy Plan

by Leroy Baker,, New York

16 October 2012

The Internal Revenue Service (IRS) has requested the United States Bankruptcy Court, District of Delaware, to throw out the bankruptcy plan of Solyndra LLC, a former solar panel manufacturer.

Solyndra, a US manufacturer of innovative cylindrical solar systems for commercial rooftops, announced at the end of August this year that global economic and solar industry market conditions, including the availability of cheaper imports from China, had forced it to suspend its manufacturing operations.

Its subsequent bankruptcy has led to various protests, including one from the US Energy Department that provided USD500m loan guarantees to the company, and another from the IRS which has protested that Solyndra’s liquidation plan is designed with the main purpose of avoiding future taxes for its parent companies, Madrone Partners and Argonaut Ventures.

It is said that the future value to the parent companies of the reported minimum USD750m net operating losses (NOLs) carried forward from Solyndra is much greater than the funds available to the companies’ unsecured creditors, and the IRS has accused them of making arrangements, as far back as 2010, to preserve those losses for their future tax benefit.

In fact, it is also alleged by the IRS, the shell company, formed by Madrone and Argonaut out of Soyndra’s bankruptcy, and which holds the NOLs, has little other commercial benefit than to reduce their future tax liabilities.

A hearing on the case is scheduled in the Bankruptcy Court on October 17, 2012, and has received greater attention than usual because Solyndra’s State Department loan guarantees were previously trumpeted as a prime example of President Obama’s support for renewable energy.

TAGS: court | compliance | tax | business | energy | law | corporation tax | Internal Revenue Service (IRS) | manufacturing | United States | tax breaks

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