A123 got $1M from feds the day it filed for bankruptcy

How's this for timing? Electric car battery manufacturer A123, which supplied batteries to Fisker Automotive and General Motors, received a $946,830 payment from the US Energy Department the day its filed for Chapter 11 bankruptcy protection.

The Oct. 16 payment was revealed in a letter shared with Sens. Chuck Grassley, R-Iowa, and John Thune, R-S.D., who have questioned federal financing for the company, Reuters reported.

A123 and its two affiliates filed for Chapter 11 bankruptcy protection October 16, a day after missing a deadline to make a $2.8 million interest payment to bondholders. The company also announced at the time it would sell off its automotive business to Johnson Controls in a deal valued at $125 million.

The same day A123 received the nearly $1 million payment as part of its $249 million clean energy grant from the DOE, the company said in the letter. The letter, dated Nov. 14, said the October payment was the most recent disbursement it received from the government, Reuters reported.

A123 has not received the entire $249 million grant. According to its letter, there's $115.8 million still outstanding on the grant. A123 says it may still need the rest of its grant money if it updates or expands its current manufacturing capacity, Reuters reported.

The DOE said in a statement that it "takes its responsibility to be good stewards of the taxpayers' money very seriously."

Photo: A123 Systems

This post was originally published on Smartplanet.com