On 19 October A123 Systems announced that the US Bankruptcy Court for the District of Delaware had granted its request to use US$15.5m of its US$72.5m Debtor-in Possession (DIP) financing from Johnson Controls to support the insolvent battery maker’s operations throughout the Chapter 11 transaction process. A court hearing for final approval of the DIP financing has been scheduled for 30 October 2012.
A123 had already entered an asset purchase agreement with Johnson Controls, in which Johnson Controls expects to acquire A123’s automotive business assets. However, the Chinese automotive supplier Wanxiang Group announced in August this year as A123 Systems’ intended saviour, has vowed to top Johnson Controls’ offer for the battery maker’s automotive assets at an auction. An auction has to be held under Chapter 11 of the US Bankruptcy Code before a bankrupt company’s assets can legally be reassigned, to ensure the optimal redress for its creditors.
