In the case of Solyndra, the senior lender is also the largest equity owner, Argonaut Ventures, an investment vehicle controlled by George Kaiser. Argonaut got the preferential position when it agreed to make a $75mm term loan to Solyndra back in February of 2011.
Note: DOE representatives participated in the structuring of the Argonaut term loan. The DOE specifically granted the preferred position. Six months ago the good folks at the DOE had to have known that Solyndra was a sinking ship. If we later hear that either the DOE or the President were shocked and surprised that Solyndra went into the tank, then we know they are lying.
In the layer cake of creditors the highest tier is the DIP (Debtor in Possession). This loan is only granted after a chapter filing. It is approved by the court and as a result stands first in line. The DIP lender has significant sway in the timing and the manner of assets sales. Not surprisingly, the proposed provider of the DIP is Argonaut. (The deal calls for a 15% rate and an $80,000 front end fee. Not bad for a four-week loan)
This means that Argonaut is in control two ways, the senior loan and the DIP. They have both a belt and suspenders, they are wearing the pants in this deal and their pants are not going to fall down.
The Debtor has filed a plan with the court. The CFO, W.G. Stover Jr, has filed this petition. This document is the company’s plan for what should happen next.
Note: Solyndra is being advised in these matters by the cream of the crop, Gibson Dunn and Crucher. GDC is a very high dollar firm. They typically represent private money interests. I would have expected GDC to represent Argonaut. The fact that they are representing Solyndra is another question mark in this questionable deal.
The plan put forward is a four-week sale of the company. The logic behind this very rapid schedule is that Solyndra is still burning cash at the rate of $1mm a week. How long will the $4mm DIP financing last? Four weeks. The terms of the DIP makes it a sure thing that Solyndra is going to be sold ASAP. That sounds good. But not for the DOE.
The one-month period is a very short time frame. The likely result will be that no serious alternative buyer will appear. Should that happen, the senior creditor will get all of the assets of the company at the end of 30 days. That would be Argonaut. It's possible that Argonaut will end up owning a company that lists $850mm in assets for less than $100mm.
A bankruptcy attorney who is knowledgeable about the Solyndra case has contacted me. I thought I’d share his thoughts with you. His words describe the situation much better than I:
Two things that jump out at me from the Affidavit - the Tranche A lenders (Argonaut) are offering to be the DIP lender. The terms contained in the DIP agreement usually are the vehicle by which assets are stolen via seemingly innocuous terms that when taken as a whole, serve to control the bk process.
The secured lender will seek to bid for the assets via a credit bid, where they don't have to put new money on the table - their existing secured loan becomes their bid.
The second item that pops out is the dual track marketing - where they will market Solyndra as a whole and as pieces. The affidavit talks about a 4 week marketing runway - that's crazy short even for a podunk company with 1/10th the size. No one can do Due Diligence in 4 weeks. It leaves the DIP lender in a great spot.
The company will claim they don't have the cash to survive a longer marketing runway, and then they will throw their hands up 4 weeks later and say that the horrible deal on the table is the best and only option (and usually for good measure they throw in that it will preserve jobs, they always throw that in) - and at that point the shitty contrived deal is the only option.
Judge bangs his gavel down and the deal is done, and all legit, sanctioned by the bk process itself - everyone was given an opportunity to object in court, provided you can afford 700 dollar an hour bk attys.
Okay, after all of that you have to conclude that Argonaut stinks in this. They are sitting in the catbird seat with the preferential position. They have the courts (and the lawyers) on their side. What possible option could the US Government have to stop this from happening? That’s easy. All they have to do is accuse the existing management of fraud.
No BK judge would accept the petition of a former corporate officer regarding the disposition of company assets if that same officer was under the cloud of fraud charges. I think this must be the reason that both the company’s headquarters and senior officers homes (including the CFO) have been raided by the FBI.
There is a clue in the affidavit submitted to the court:
“In Early August, Solyndra, certain holders of Tranche A Debt, and representatives of the DOE undertook negotiations regarding further restructuring that would allow Solyndra to attract necessary new investment. The negotiations over the terms of the further restructuring continued throughout August 2011."
It's simply not possible for the folks at DOE who were part of these meeting to not have realized that Solyndra was headed for the garbage can. They had to be lawyers. They are not stupid. There had to have been memos and phone calls back to the DOE and ultimately with the President during August on the failing status of the company. If during that month they had any suspicions of wrongdoing or fraud by the company’s officers they would have alerted DOJ and the FBI raids would have happened before the company filed a bankruptcy petition. The business about raiding homes is just a smoke screen.
In the next week the Court will rule on the proposal for a four week sale and the $4mm Argonaut DIP. If that plan is approved, what is left of Solyndra will go to Argonaut and the US DOE will suffer a loss of 100% of its $528mm loan.
As part of this process DOE will file a brief. That brief has to be a smoking gun that forces the judge to deny the company’s/Argonauts plan. That brief HAS to have some teeth in it. The only teeth that has merit is that the people who ran the company were crooks and lied to the DOE. The problem with that contention is that there is so much evidence to the contrary.
It should be interesting to see what the DOE has to say. It will be very interesting to see how the judge rules. I’ll be watching/writing.
.
Good work Master Bruce!
ABC in front of judge lol on hands and knees with a great sucking sound ..
here cums the judge
Seeing as how the DOE was sitting in on Solyndra Board Meetings and had access to insider information,, if I were another creditor, I would be looking to ask the court to structurally subordinate their asses.
I agree, it's high time that someone besides us had their asses structurally subordinated.
people who control equity & credit positions typically use a speedy bankruptcy court process to (1) perfect title prior to an inquiry of past conveyances & (2) to simplify ownership.
this is an awful lot of money. the devil in this deal is something currently categorized as past ordinary loss that was really a capital reimbursement or political payoff. you need good attorneys to supress this inquiry via administrative rule.
I wonder how many managers & partners at PWC are cleaning up files this weekend. http://news.cnet.com/8301-11128_3-20001652-54.html
nice find
embedded in that artilce from April is this SEC filing
http://www.sec.gov/Archives/edgar/data/1443115/000119312510058567/ds1a.h...
and an article from February indicating trouble http://news.cnet.com/8301-11128_3-10449245-54.html
and the fact that TESLA also got $$$$ hmmm
With the reach of Zero Hedge and the financial sleuthing of Krasing (the Muddy Waters of Green Tech) next stop is to get Drudge to pick up Krasting's work and hammer it into the MSM
Narnia, your link, from April of this year, mentions $970 million in debt. It seems like Solyndra was a scam/ponzi from day one.
Hey, the whole "green tech" thing is a scam. Costs more energy to produce the technology then you get out over its lifetime when maintainence is accounted for-just like the ethanol subsidy scam. A classical ponzi in energy. Same with "high speed rail" loans and guarantees. There's a reason ZH refers to the 2009 stimulus as "porkulus"!
Government spending is the very definition of "malinvestment". Wasn't housing stimulus the last government malinvestment that's currently imploding the system? When will these fabian socialists just leave us alone? (When hell freezes over of course)
I'm all for zero government involvement in energy, but I don't agree with you on solar.
Comparing solar to coal or natural gas or oil in a farm / central distribution enviornment is always a loser. If all costs of central infrastructure are considered (underground utilities, metering, utility capital, oversight, maintenance, waste in delivery, etc.), solar is feasible where it is sunny.
In a free market, decentralized energy & food production will win.
Govt == Entropy2
April 2010, actually.
This looks like a mob operation. For you Goodfellas fans- bring in Pauly as a partner, pay him no matter what, then torch the restaruarnt when the operation no longer is extended credit, collect the original investment in insurance proceeds / liquidation. kind of like AIG, the federal gov is the insurer for both.
Now the guy's got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, he can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy's got to come up with Paulie's money every week. No matter what. Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. The place got hit by lightning, huh? Fuck you, pay me. Also, Paulie could do anything. Especially run up bills on the joint's credit. And why not? Nobody's gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn't matter. It's all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.
+1
It's simply not possible for the folks at DOE who were part of these meeting to not have realized that Solyndra was headed for the garbage can. They had to be lawyers. They are not stupid. There had to have been memos and phone calls back to the DOE and ultimately with the President during August on the failing status of the company. If during that month they had any suspicions of wrongdoing or fraud by the company’s officers they would have alerted DOJ and the FBI raids would have happened before the company filed a bankruptcy petition. The business about raiding homes is just a smoke screen.
In the WSJ article yesterday it said that the raid was made jointly by the FBI and the DOE. So if the DOE has been a bad actor since day one (helping to grant Solyndra a lower interest rate than other solar/green outfits got, waiving through the shady debt restructuring etc.) what are the chances that they are going to gather/not bury evidence that could incriminate themselves and the Obama administration?
Also remember that this administration has a history of throwing established bankruptcy procedures and precedent out the window (Chrysler) so I wouldn't take it for granted that things will go A,B,C when it gets in front of a judge.
I like to think of bankruptcy lawyers as well-dressed carrion beetles.
http://en.wikipedia.org/wiki/American_carrion_beetle
Once Again Kasting is creating a scandal that does not exist.
Where is the FRAUD by the existing management?
Were not the bankruptcy laws followed as kosher?
Why is ARGONAUT not the best party to end as the controlling "Father" to keep SOLYNDRA alive?
ARGONAUT made the big intial investment and deserves first rights to keep it going.
Furthermore if you bothered to UNDERSTAND THE TECHNOLOGY then you would know
why Obama and Chu want SOLYNDRA to stay in the solar game.
This is SPECIAL TECHNOLOGY of CURVED SURFACE AREA SOLAR panels that are
more efficent due to more sun absorbed.
But the CHINESE FLAT PANELS underpriced them in the market, yet the technology is real and works.
SO KASTING, you have your hair on fire, over nothing, and you MISSED THE MACRO PICTURE.
Global Warming so threatens our society, every good green technology must be "ASSISTED".
Thats why Obama and Chu are paid the big money to think BIG, not small like you Kasting.
And another error in your analysis, you assume every Liberal and Progressive are like
Conservatives on Wall Street... corrupt thieves who lie and cheat to win and profit.
WRONG DUMMY.
Most Liberals and Progressive actually like to win based on facts and truth and research.
"Most Liberals and Progressive actually like to win based on facts and truth and research."
WRONG DUMMY
The largest initial invest was made by the taxpayer when they co-signed for $500,000,000.
The facts, truth, and research all demonstrate that conventional hydrocarbon energy sources are the least costly. ALL of the "Green Solutions" require backup power from those sources, and those costs are not included in the green energy prices.
If a shore bird dies as a result of oil and gas operations there are large fines levied on the producer. IF protected eagles are whacked by the whirly gigs, don't worry that is just the price for clean energy. The damned whirlers are sitting all over the country, broken down and inoperable but not removed. Where is the bonding for the removal of these eye sores?
Sailing ships once ruled the oceans. We don't do it that way any more. Someone found a more reliable energy source for faster and more dependable delivery.
I hope you are able to progress past your religious stage in the belief of green energy solutions.
Your point:
Global Warming so threatens our society, every good green technology must be "ASSISTED".
"Assisted" you say? We can argue about that. But the Solyndra story is not about Assistance. It was a rat hole. The $535mm loan went up in smoke in less than three years!!
Ask youself, could this half billion have been better spent? In a million better ways is the answer. And yes, some of it should have been spent on alternative energy.
This was just a waste. It will set back that "Assistance" you think is needed for at least five years.
Trust me. Nothing good will come from this.
Thanks for watching/writing Bruce; a great job. Might as well throw in Obummer's new BFFs: GE, Jeff Imelt, and those ridiculous new light bulbs too. Another $$$ travesty stuffed down our throats.
Bruce. Great job. I have been following some of the links to articles noted in this thread, and other links within those articles. Solyndra's loan was approved in March of 2009, just two months after O was sworn into office.
some tidbits from those links:
In an interview with The Wall Street Journal on Friday, Chu said that the goal is to spend about half of the roughly $37 billion set aside for clean-energy projects in the coming year.
"The synopsis of the loans I've seen in innovative green energy -- they're in the hundred-million dollar range. They're in big hunks of money," Chu said"The secretary is committed to streamlining the process and eliminating unnecessary paperwork so that we can make these important investments that create jobs as quickly as possible," Energy Department spokesman Dan Leistikow told Reuters.
In an interview with The Los Angeles Times earlier this week, Chu spoke about the potentially severe economic and environmental impact from climate change, particularly in California.
"I don't think the American public has gripped in its gut what could happen," he told the newspaper. "We're looking at a scenario where there's no more agriculture in California." And, he added, "I don't actually see how they can keep their cities going."
Read more: http://news.cnet.com/8301-11128_3-10159101-54.html#ixzz1Xboi49MS Bruce, it should be no surprise if this is just the tip of the iceberg. If one has the slightest understanding of how the Federal government should procure goods and services and grant funds or loans, it is absolutely incredible how this administration has spent so much in such a short time. It all seems so ... Chicago_esque. I propose that ZH pursue the Solyndra scam as a Wiki-type investigation.Just as the Swiss National Bank destroyed 100 years of trust in it's currency overnight, Bruce, you just gave up your lifetime of being a good little liberal by implying criticism of the liberal's Dear Leader. You are now a racist.
As we used to say in the Navy: "one oh, shit cancels out 1,000 attaboys".
I imagine having a half billion dollar hole in the DOE's budget probably pisses somebody off. Say HELLO TO THE NUCLEAR REGULATORY COMMISSION! "And Kaiser better watch out when he get's on that nuclear powered treadmill too!" I mean come on...these people are being totally ridiculous at this point. Directly screwing the Federal Government of the USA because "i'm an aggregator"? Take the losses you flag burning dip shit. "No criminal breaks just one law" as they say. On the other hand..."you're rich. GO FOR IT!"
Hey. It's the Chicago Way in action, the only way Obama-Emmanuel-W. Daley know. You gotta a problem wid dat, chumbolone?
It's the Chicago Way - nuff said. Boeing, Gibson, Solyndra...
And they went through a trainload of filthy fiat and a tanker of vaseline in Chicago with the United Airlines bankruptcy. A lot of permanently damaged shareholder and shareholder employee butts left from that one. Funny how the management, the lawyers and others made out just fine.
If we're waiting for Eric Holder to do anything on this (or anything else), good luck with that.
And Bruce's work is yet another example of the sorry state of affairs in the U.S. in that the only real investigative journalism seems to take place in the alternative media. Is the Solyndra story even mentioned by the MSM? Or is it 9/11 24-7 these days?
Sept 1 http://abcnews.go.com/Blotter/solyndra-collapse-waste-half-billion-obama...
Sept 7 http://abcnews.go.com/Blotter/solyndra-lowest-interest-rate/story?id=144...
but not a mention or reference on the Obama network (NBC)
The whole bankruptcy process is disgusting. I'm just watching the BlockBuster bankruptcy unfold in Canada and the law firms were charging the bankrupt's estate $250/hour for students to work on the files! And $1000/hour for senior counsel. The players involved don't even try to preserve any value for the estate. Its bad enough when a firm has to go bankrupt, but the ensuing rape by lawyers makes the whole situation far worse.
DIP loans are senior that to of all other creditors' claims. It is nothing less than fiduciary abuse for a trustee or administrator of a bankrupt company to accept nothing greater than the rates applicable to senior secured financing.
Only the parasites make money anymore...
Make no mistake, Obama needs and wants this to go away.
Unless a congressional oversight committee gets on it, it will indeed go away.
and maybe just maybe they will get on it
Great find Earl.
They want a lot of things to just "go away"...like crime scene weapons...
"Unlike the two AK-style assault weapons found at the scene, the third weapon could more easily be linked to the informant. To prevent that from happening, sources say, the third gun “disappeared.”
http://pajamasmedia.com/blog/gunwalker-explodes-fbi-hid-weapon-tax-dollars-subsidized-murder/
The FBI has been known to condone murder and false testimony in their perverted pursuit of "justice". They are nothing more than thugs with badges. Absolute power corrupts absolutely
The sad thing is...no knows how to stop it.
There's good & bad people in there. A simple desk clerk is just as involved as a field agent. I wouldn't be able to sleep at night knowing I took a part in it...knowing or unknowing.
This is how its done in my estimation..."I was just following orders, just doing my job, it wasn't my fault."
Bullshit!...stand the fuck up!
Nice link nmewn. I bet for every 100k the fbi or similar agencies plant they get an additional 1 mil plus in funding to keep these "narcoterrorists" away from the good kind people of the U.S. Talk about RICO Act.
Thanks Blankman.
My view is, this particular bit of political stupidity (Gunrunner) started out as a way to call for more gun regulation at the federal level. Now it has evolved into a massive coverup...they even did it within our borders...that is, state to state.
They are now going after anyone (Peter Forcelli for one) with the full power of the state, who comes forward speaking the truth.
Stay tuned...
list of members of the Subcommittee on Oversight and Investigations
http://democrats.energycommerce.house.gov/index.php?q=subcommittee/subco...
if you are a yank you should contact the members
hopefully this hearing will be broadcast live
(unbelievable - there are two gov sites for energy and commerce one for the dems and one for the repubs)
________________
here is the rep subcommittee chair (Stearns) on Fox News discussing Solyndra last week
http://www.youtube.com/watch?v=BG0iAtpKKuQ
and here is his website
http://stearns.house.gov/default.aspx
__________________
and here is a dem perspective from everyone's favorite Henry Waxman (who seems to be trying to say that he was fooled too)
Ranking Members Waxman and DeGette Request Solyndra CEO Testimony
http://democrats.energycommerce.house.gov/index.php?q=news/ranking-membe...
and
_______________________-
Solyndra's CEO (Brian Harrison) letter to Stearns from July that says everything is great!!!
http://democrats.energycommerce.house.gov/sites/default/files/image_uplo...