State-Subsidized Company Files Bankruptcy and Heads to China
A state-subsidized energy company filed bankruptcy Monday, listing almost $500 million in debt.
Evergreen Solar Inc. is the Massachusetts-based clean-energy company that received subsidies from the Patrick-Murray Administration in order to fund a new factory in its home state, according to a report from The Boston Herald.
Here’s a video of the Massachusetts governor at the time, Deval Patrick, making a speech in 2008 to congratulate the expansion of Evergreen Solar and to illustrate his vision of private business and government working together to build, what he called “a different kind of business climate to grow that sector.”
Republicans in Massachusetts called Patrick’s later $58 million aid package a “waste” of money.
“The bankruptcy of Evergreen Solar is another sad event for the Massachusetts company and highlights the folly of the Patrick-Murray Administration which has put government subsidies into their pet projects instead of offering broad based relief to all Bay State employers,” said Jennifer Nassour, head of the state GOP.
The company specializes in creating solar panels. The decreasing demand for that technology coupled with lower-cost competition in China put the company on its heels. When it shipped some of its production out of the United States to a factory in Wuhan, China, company officials said they would have to start laying off American workers.
The job cuts started at the Devens factory, where no fewer than 800 people lost their jobs in March – that’s the factory Gov. Deval and then CEO Rick Feldt were introducing in the video above. And, coincidently, March is the same month Evergreen official, Michael El-Hillow, said the company had “earned” 85 percent of the taxpayer benefits it received because of the jobs it originally created. In April the company warned investors of how quickly it was going through money, especially since the selling off of the Devens factory brought feeble returns. Evergreen said it’s now planning to cut at least 65 more jobs, mostly from a shutdown of its facility in Midland, Mich. If that happens, the company will have less than 70 employees – at least in the United States – according to a head count listed in the bankruptcy filing. Evergreen Solar’s joint venture with the factory in Wuhan, China will continue to operate, depending on the wishes of Chinese investors.
And shareholders shouldn’t expect to see many of their investments coming back to them. The company suffered almost 60 percent losses on Monday, finishing the Nasdaq at 18 cents a share. Evergreen officials told The Boston Herald that investors will probably receive “no distributions” from the asset sales after creditors are repaid.
The troubled company announced that it has filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Delaware. Evergreen also announced that it would try to sell its assets under the reorganization, including a technology that one energy blog refers to as the core of the company’s existence.
The state of Massachusetts is still trying to recover about $4 million from the Marlboro-based company.
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