A123 systems, the company that supplied battery technology to the Chevrolet Volt and Fisker Karma, has filed for bankruptcy under chapter 11 of the U.S. Bankruptcy Code.
The bankruptcy filing is helping to facilitate an asset purchase agreement between A123 and Johnson Controls, one of the world’s largest automotive supply companies. Johnson Controls has committed to $72.5 million for debtor in possession financing, which means that A123 will be able to continue regular operations while the sale is taking place.
Johnson Controls will be acquiring A123′s automotive business assets, including all of its automotive technology, products and customer contracts, its facilities in Livonia and Romulus, Mich., its cathode powder manufacturing facilities in China, and A123′s equity interest in Shanghai Advanced Traction Battery Systems Co.
The bankruptcy has also sparked some political controversy, as the Obama administration provided the company with a $249 million grant to help them further battery technology, in hopes to meet their goal of 1 million electric cars on the road by 2015. A123 faced a major battery recall with the Fisker Karma battery packs, which was one of the main catalysts behind the government stepping in to help out.