Judge approves bid procedures in A123 bankruptcy

Associated Press Modified: November 8, 2012 at 2:45 pm •  Published: November 8, 2012
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A123, which makes lithium ion batteries for electric cars — including those made by Fisker Automotive, another recipient of DOE financial help — also makes batteries for grid storage and commercial and military applications.

Wanxiang has sought to extend the sale process in order to allow more time for regulatory approval. Uncertainty over that approval is one reason why the battery maker has pushed for a quick sale to Johnson Controls.

"Unlike Wanxiang, Johnson Controls can control its own destiny," Timothy Pohl, a managing director of Lazard Frères & Co., testified Thursday. His firm is serving as A123's financial adviser.

Bojan Guzina, an attorney for Wanxiang, said the company is confident that it will eventually obtain regulatory approval.

Judge Kevin Carey on Thursday also approved A123's performance-based incentive plan for 10 senior employees, but not before the company reduced the amount of bonuses by 12.5 percent in response to objections from U.S. trustee. The trustee nevertheless maintained its objection to the plan, which had an initial estimated cost ranging from $2.4 million to $4.2 million.

Mark Kenney, an attorney for the U.S. trustee, argued Thursday that the performance goals outlined in the bonus plan were too low, virtually guaranteeing payouts, and that the plan was primarily designed to keep top employees from leaving, rather than spurring them to work harder.

Carey overruled the trustee's objection, saying there was a rational basis for incentivizing top managers "to go all out."

The judge also approved a retention plan estimated at about $2.4 million for 66 other A123 employees, as well as a severance plan for all of A123's roughly 940 full-time employees to replace a plan that was in effect before the company filed for bankruptcy protection.