Business

Solyndra Allegedly Violated Loan Guarantee Terms in 2010 but Feds Restructured Anyway

The Solyndra scandal — unlike the company’s nonexistent profits — keeps growing.

There have already been several elements to this scandal that have been unearthed and discussed.

The execs pleading the fifth, the alleged connections between Solyndra and the White House (Solyndra’s executives are apparently eager Obama donors), the ignoring of the White House budget analyst who wrote an email warning that the deal was “NOT ready for prime time,” and so on.

And more facts are coming to light.

Solyndra had massive financial issues in 2010. So bad, in fact, that the company was in violation of the terms of its loan-guarantee agreement with the Department of Energy and technically “defaulted” on its $535 million loan-guarantee agreement, reports The Wall Street Journal (WSJ).

Back in 2009, the Obama administration proudly proclaimed that Secretary Chu was offering a loan guarantee to Solyndra by signing a “conditional commitment.“ A ”conditional commitment” (i.e. the earmarking of funds that becomes an actual commitment only when specified conditions are fulfilled) that Solyndra was in no position to honor.

Energy.gov happily announced:

Just as homebuyers who have been approved for a loan are required to meet certain conditions before closing, the conditional commitment will require Solyndra to meet an equity commitment as well as other conditions prior to closing. Today‘s action signals the Department’s intent to move forward on Solyndra’s application for $535 million loan guarantee provided the company meets its obligations.

However, Solyndra was so short of cash in December 2010 that it was unable to meet the stipulations of its U.S. loan-guarantee agreement. The agreement required Solyndra to provide $5 million in equity to a subsidiary that was building its factory but “cash-flow problems” prevented those payments.

So how did the feds respond to these obvious warnings?

The government decided to restructure (reshuffle/reorganize) the loan agreement to help keep the company in business and Solyndra continued to draw money from its lenders.

The Wall Street Journal Reports:

The company’s financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

Rep. Cliff Stearns of Florida, who is heading the Republican congressional investigation into the company, said, “Solyndra ran out of cash in December 2010, yet DOE continued to ignore the red flags and astonishingly doubled down on a bad bet and restructured the loan, further putting taxpayers at risk for what could now be a half billion dollars.”

Administration officials have defended the initial loan guarantee and subsequent restructuring, saying they were trying to protect taxpayers, according to a recent FOX news report.

The loan was officially restructured in February 2011, guaranteeing the company enough money to see its way through the end of August.

“The company, which had drawn down $475 million of the U.S. loan as of Dec. 31, 2010, ended up borrowing $527 million before its bankruptcy,” reports the Journal.

Jonathan Silver, executive director of the loan program, recently told lawmakers the government faced the difficult choice of either forcing Solyndra to close its doors or approving the restructuring to give it “a fighting chance at success and the government a higher expected recovery on its loan.”

Doug Mataconis of Outside the Beltway sums it up nicely:

Now it’s worth noting that many of these moves are not at all unusual in high stakes commercial lending, although a lender who restructures a loan and subordinates debt typically gets something in return for it like a Personal Guaranty. Unusual or not, though, it’s just another one of those things that is going to lead to questions about this entire deal and, in a political context, it just doesn’t look good, especially given the political connections between Solyndra’s ownership and the Obama White House.

In other news . . . Solyndra’s assets will be sold at auction next month. Anyone want to guess how many pennies on the dollar Uncle Sam is going to get out of this one?

The fact that they were unable to meet a $5 million requirement should have raised every red flag possible, as the WSJ points out in this video:

If this Solyndra spectacle is not already a headache for the Obama administration, it will be pretty soon.

Comments (57)

1 2
  • seeker2
    Posted on September 29, 2011 at 12:28pm

    The taxpayers provided $500,000,000+ which Solyndra used to build an allegedly extravagant building. The loan was restructured to give private investors priority over the taxpayers. Such a good investment by the “private investors” —for an investment of $75 million, they get priority on assets which allegedly cost $575 million, but which will, no doubt, be discounted in the bankruptcy proceedings. So those “private investors” may obtain free and clear title to assets greater than their investment. Funny thing, those “private investors” are the same guys who had multiple visits to the Obama White House. This is like the Chrysler‘s bailout where the bondholders’ rights were ignored (read stolen), to the benefit of the union members. This doesn’t pass the smell test!

    Report Post »  
  • Junter
    Posted on September 29, 2011 at 11:10am

    “Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.”

    1. It is not our government’s job to pick winners in private sector.
    2. It is not our government’s job to put private investors before the tax dollars of millions of tax paying citizens.
    3. It is not our government’s job to secure 1/2 million dollar loans to campaign contributors.

    It IS our government’s job to get to the bottom of this and penalize those who acted negligently.

    Report Post »  
    • Junter
      Posted on September 29, 2011 at 11:14am

      My mistake, 1/2 billion dollar loans.. the number is so big it doesn’t roll off the tongue..

      Report Post »  
    • lorrainnidaho
      Posted on September 29, 2011 at 11:57am

      People this gets even worse. Obama just gave another 737 Million to ANOTHER Solar company and this one just happens to be run by Nancy Pelosi’s brother in-law!!!!!!! I want it investigated and stopped!!!!!!!! I have written to my Senator. This is totally corrupt.

      Report Post » lorrainnidaho  
  • cemerius
    Posted on September 29, 2011 at 9:50am

    Insanity defined = Doing the same thing over and over again and expecting different results!! This administration/government has thrown good money after bad so many times this is turning into nightmare on elm street…..

    Report Post » cemerius  
  • timbofire
    Posted on September 29, 2011 at 8:42am

    The longer we wait, the worse it will get until obamavomit and his jihad on America succeeds! There will be no FREEDOM left standing, poltical, economic or otherwise! It is time to erect the barricades and storm the Bastille (WH), shouting “Off with their heads”! Waiting in the wings is Mojave Solar, but this time to the tune of 1 billion plus taxpayer dollars! Impeachment is not an option, it is too kind Absolute overthrow of this evil dynasty is what is needed. America, and all that she stands for, is under full frontal attack! We have fought and won one battle against tyranny and oppression, now is the time to fight again. Fight or die! No options, they have all been used up. We need true leadership, not Boenher “The Cry Baby”! Where is our George Washington? And as Mich, the bitch, Antoinette squanders our dollars on safari, she shouts out, “Let them eat vegetables” while she eats french fries and Obama, “The Glutton”) scarfs down hamburgers! Sharpen the guillotine and prepare the public square (White House lawn). ake this a spectacle of spectacles, as has never been seen before, and a warning to Princess Pelosi ( the Raging ) and Prince Harry (the Wimpy Whiner”) that their behavior against the people will NOT be tolerated! If it is to continue, then off to the guillotine with them as well! Washington needs a complete purge! Now is the time, America! Love this land, defend it at all cost. Stand up! Defend it from all enemies within!

    Report Post » timbofire  
  • Hobo Gator
    Posted on September 29, 2011 at 7:36am

    No problem. Let me have the factory for free. I’ll contract with the US Government who will provide me with employees that are paid and provide for by the government . Maybe the people collecting unemployment, or of social welfare payments, and they will have to work at the factory from 7:00am – 4:00pm. The government will monitor the workers attendance and provide transportation to the factory. No work rules, environmental concerns, or OSHA safety requlations will be enforced. No pension, no overtime. The end result will be a very competitive product at a rate that can compete against, CHINA. Profits will be shared with the government to help pay for the program. Get the picture of what US manufacturers are up against.

    Report Post »  
  • David Zuckerman
    Posted on September 29, 2011 at 1:48am

    Support Obama: patronize Solyndra.

    Report Post » David Zuckerman  
    • 4SmallGov
      Posted on September 29, 2011 at 2:16am

      Dave,
      You are the kind of investor we are looking for; I have a great new green energy idea. My company Moolyndra is going to burn cow farts for low cost green energy. We will of course need your support and a government grant of 400 to 700 million dollar to procure a couple of old milk cows and a box of matches. I am sure you and the Obama energy experts will find this a worthy investment. Please let me know if you would like to join the Moolyndra team.

      Report Post » 4SmallGov  
    • old white guy
      Posted on September 29, 2011 at 7:02am

      the government could have protected the taxpayers by not giving solyndra 527 million dollars.

      Report Post »  
    • David Zuckerman
      Posted on October 5, 2011 at 7:43pm

      I was being facetious in my post.

      Report Post » David Zuckerman  
  • buckster6.0
    Posted on September 29, 2011 at 1:17am

    But if you miss a few house paments they take your house,back taxes?too bad they take your stuff,Hell in Arkansas if your a few months late payin your proprety tax they put your name in the paper.

    Report Post »  
  • 4SmallGov
    Posted on September 29, 2011 at 12:39am

    I have a great new green energy idea. My company Moolyndra is going to burn cow farts for low cost green energy. We will of course need a government grant of 400 to 700 million dollar to procure a couple of old milk cow and a box of matches. I am sure the Obama energy experts will find this a worthy investment. Moolyndra is currently looking for some top notch people, we offer very very very completive pay come get rich with Moolyndra.

    Report Post » 4SmallGov  
  • roadhog
    Posted on September 28, 2011 at 10:54pm

    Stop All these Loans. Put the Crooks in Jail.

    Report Post »  
  • Carefreeflyer
    Posted on September 28, 2011 at 8:09pm

    After the now breaking scandals of Solyndra and LightSquared; Obama doubles down and doles out another $1 billion to two solar companies. Of this huge payout, over $737 million goes to Tonopah Solar, a subsidiary of California-based SolarReserve, which is linked to PCG, run by Nancy Pelosi’s Brother-in-Law. Talk about corruption.
    Who in the Department of Energy ever authorized the distribution of these loans?
    And we thought the officials involved in the gunrunning scandal “Operation Fast and Furious” were corrupt. It just keeps getting worse. Note to Holder and Obama’s Czars; these huge scandals aren’t going away.

    Report Post » Carefreeflyer  
    • jhaydeng
      Posted on September 28, 2011 at 8:25pm

      I heard that too! I think I will start selling solar panels! I can’t wait to utilize all of your money!!!!!!!!

      Report Post »  
    • CulperGang
      Posted on September 28, 2011 at 8:45pm

      The huge scandals are not going away…….WHO CARES???? You see anyone in cuffs? you see the Senators calling for an impeachment???????????/ You are under a fascist dictatorship and there is N LAW and order applied to the government.
      What will it take American people to realize the government IS YOUR DICTATOR. They have grabbed power from you and your fat azz and are not accountable to you. Nor does “criminal sanctions” apply to them. That is for you fat joe the plumbers azz.

      Report Post » CulperGang  
  • tootsie roll
    Posted on September 28, 2011 at 8:05pm

    Impeach Obama and put him, Chu and DOE who sign off on the loans in jail.
    TAKE ALL OF THEIR PERSONAL ASSESTS AND GIVE IT BACK TO THE
    GENERAL FUNDS. ALSO PROSECUTE ERIC HOLDER FOR HIS CRIMES
    AGAINST THE US CITIZENS WHO DIED BECAUSE OF THE FAST AND FURIOUS
    DEAL. SOLYNDRA MEN TAKING THE FIFTH SHOULD HAVE ALL ASSETS STRIPPED AND
    BE PLACED IN JAIL ALSO. MORE LOANS TODAY ITS TIME TO REMOVE HIM FROM THE
    W. H.

    Report Post »  
  • lstoddard004
    Posted on September 28, 2011 at 7:41pm

    The current President should be impeached (for the kick-back), his administration held accountable and Solyndra’s executives ALL go to jail. Why is it that the Barney Franks, Chris Dodds, now Secretary Chu and others cause a crisis’ and sink tax payers dollar and are NOT held accountable? Heck, any one of us would be prisoned for life. Time to VOTE this administration OUT OF OFFICE!!!

    Report Post »  
  • bleuze
    Posted on September 28, 2011 at 7:32pm

    I heard today that they are now considering a guarantee for $700M for a “green energy” type of start up once again in California. Did they ever learn their lesson?

    Report Post » bleuze  
  • Cynic-clinic
    Posted on September 28, 2011 at 7:30pm

    If you understand what the following paragraph, from Bloomberg news, is saying, you will underatand a lot about Solyndra and what took them down:

    “Solyndra executives rushed construction in a race to fill orders, putting some work on a 24-hour, seven-day schedule. The factory was up and ready for equipment installation in 10 months. The project employed more than 3,000 union construction workers, according to a Solyndra background sheet.”

    Solyndra’s “RUSH TO FILL ORDERS” was to finish their highly extravagant production/demonstration building–not to fill orders for their solar panels. The rush was to put their solar panels on the roof of their expensive building to DEMONSTRATE their product for which they had NO ORDERS. The news release above proudly tells of 3000 UNION WORKERS working 24 hours a day, not to fill orders for the solar panels which would have brought income for the company, but to finish building their gold-plated factory so Obama and his union buddies could claim to be part of the solar company that will save the planet.

    No businessman/f would ever waste capital building magnificent buildings before orders for product were flowing in even if they had to manufacture their products in rusty trailers and wooden garages. Solyndra people were image creatures just like Obama and his greek, styrofoam columns. You see where that got them.

    Report Post »  
  • johnpaulkuchtajr
    Posted on September 28, 2011 at 7:01pm

    It didn’t matter to the Obama administration if these guys were solvent or about to go under. Under the guise of “green jobs,” Obama made that one half billion dollar government-backed loan so that Solyndra could “kick-back” a certain percentage (10%) (?) to Obama’s campaign. the corporation may have given directly; or, Solyndra’s executives may have been given “loans” by the corporation which they promptly tndered to the Obama reelection campaign. Why do you think Holder had the FBI rush over to seize all the records? No records, no indictments!

    Is this what happens when you give funding power to Departments instead of Congress? You bet your life. What you see is what you get and it ain’t pretty..

    Report Post »  
    • jackal
      Posted on September 28, 2011 at 9:21pm

      That was my thought how much went in as a kickback?This whole system with all these different departments is corrupt as all get out from top to bottom.I do not think I can think of one department that does what it’s suppose to do without outside influence and fraud.The company I work for once cleared out a whole floor of people(building was a block) to remove waste the company became Top Heavy.Talk about communication started to flow once again now 15 years later it starting to show itself once again.The same could be done on the federal level in DC cut the B.S.

      Report Post »  
  • jmgair
    Posted on September 28, 2011 at 6:59pm

    Oh sure, trying to protect tax payers by ignoring the 2005 law that put the tax payers in first place to be repaid in a bankrupcy case like this one. This is another fine example of the crony politics played out on a daily basis from this administration and it is not the only one since there has been $38 billion given to these “Green Energy Job” rip offs since barry wants to look green.

    Report Post »  
  • godlovinmom
    Posted on September 28, 2011 at 5:43pm

    All these things coming up…solyndra..fast and furious..DOJ dropping black panther intimidation case…they are so numerous, I can’t even think of them all right now…could they possibly get something on obama, and make it stick….but then if he’s impeached, we get biden…nice… almost a no-win situation…2012 can not get here fast enough.

    Report Post » godlovinmom  
    • @leftfighter
      Posted on September 28, 2011 at 5:49pm

      The fact that they‘re so numerous that we can never remember them all is what they’re praying for.

      Hard to argue corruption when you can’t remember the specific cases.

      Report Post » @leftfighter  
    • godlovinmom
      Posted on September 28, 2011 at 6:01pm

      Someone better come up with a video with all the “facts” in it regarding the “numerous” unAmerican activities obama has done since he’s been in office…then run that video night and day until the elections…seriously…you do have to be reminded of them all!!!!

      Report Post » godlovinmom  
    • AvengerK
      Posted on September 28, 2011 at 6:49pm

      I‘m not going to hide the fact that I would love to see Obama’s energy secretary, Stephen Chu fired and fired during the election year so as to utterly humiliate both him and Obama. This dangerous and delusional man let the gulf spill go on and on just he could use it as an excuse to put a moritorium on offshore drilling. He hurt thousands of peoples’ livelihoods. His department subordinated the loan guarantees so that Obama‘s backers could get out with their money intact while the tax payer is left on the hook and HE made sure the loan guarantees were fast tracked contrary to government auditors’ warnings just so Obama and Biden could preen about “green jobs” and their stimulus.
      Furthermore, he insists Solyndra was a success- “the project that we supported succeeded. The facility was producing the product it said it would produce, and consumers were buying the product.”
      Think about Secretary Steven Chu’s background as a Nobel Prize-winning physicist at Berkeley. He regarded Solyndra as some kind of experiment, to prove that the process was viable (in the sense of physically possible).
      The entire question of how much it cost apparently was irrelevant to him. This is a powerful argument for keeping academics out of policy positions. Academics have a tendency to fall in love with their analytical frameworks, and find it hard to broaden their horizons in response to lessons from reality.

      Report Post »  
  • TxMadMac
    Posted on September 28, 2011 at 5:37pm

    It looks like this goes all the way to the president and with the rewriting of the loan they all saw to it that the taxpayers would be left holding the bag knowing full well how bad off America is financially. Now tell me how much this man really cares about America or it’s people, black or white. There were over 1,000 jobs lost from that company alone. He was warned about their financial condition. I smell a pack of rats that scurried off with a lot of hidden money.

    Report Post »  
    • Theleftisda
      Posted on September 28, 2011 at 6:20pm

      I smell a pack of rats that scurried off with a lot of hidden money.
      one has to ask how much of that money will be used to purchase prepaid credit cards
      for Oscama’s re-election bid?100 million the first time.

      Report Post » Theleftisda  
  • mad_hatter
    Posted on September 28, 2011 at 5:24pm

    Did you see Obama’s Director on this Department run away from reporters asking him simple questions about Solyndra? http://www.americanparchment.com/video/2011/sep/obama_adviser_solyndra.html

    What are these guys thinking, that running will make it all go away. Look at Fast and Furious, it is here to stay.

    Report Post »  
  • Popp40
    Posted on September 28, 2011 at 5:07pm

    This administration doesn’t care….they know nothing will be done to them. Our country is lost……

    Report Post »  
    • Popp40
      Posted on September 28, 2011 at 5:10pm

      Seriously, what can we do. Sure you can write and call your Congressman…..however….we all know that doesn’t do anything. The only other thing is to vote them out of office, well the election isn’t until next year and by the looks of it this administration will have enough money to pay for votes to win this election. Plus, it will be too late, seriously…..what can we do?

      Report Post »  
    • lynda1276
      Posted on September 28, 2011 at 6:36pm

      we are not lost- i refuse!!

      Report Post »  
  • TRONINTHEMORNING
    Posted on September 28, 2011 at 5:04pm

    Bottom-feeding activity; just makes ya wanna puke.

    Report Post »  
    • netmail
      Posted on September 28, 2011 at 5:26pm

      Speaking of “puke”…“trying to protect the taxpayers” is code for “dogs covering up their own vomit.”

      Report Post »  
  • randy
    Posted on September 28, 2011 at 5:01pm

    Obama needs to go to prison!

    Report Post » randy  
    • I.Gaspar
      Posted on September 28, 2011 at 5:14pm

      Maybe there’s a group rate available for him, holder, and uncle janet.

      Report Post »  
    • MakeTheMiddleEastAGlassFactory
      Posted on September 28, 2011 at 6:59pm

      Thats the best thing I’ve heard all day. U do that crap in the private sector and you would be looking at a trip to club Fed.

      Report Post »  
  • its_time_to_arrest_our_government
    Posted on September 28, 2011 at 5:00pm

    when are we the people going to wake up and throw our government in jail for this theft or OUR MONEY? WE THE PEOPLE are the ones who are getting screwed here and they are thinking they can just walk away with their pockets full of our money. its time to arrest them all!

    Report Post »  
    • HKS
      Posted on September 28, 2011 at 5:12pm

      I thought I heard somewhere that “it was from Obama’s private stash” He does a lot with that private stash. Do ya think he could get me some of that “private stash” I think everyone should have a private stash. The best ones are the ones that use other peoples money you know, now that’s a great stash. Can I have a few billion of your money for my private stash. You won’t miss it, your to dumb. Is this a great country or what. Just drop in from the jungle, flim flam the people and get your own private stash.

      Report Post » HKS  
    • David Zuckerman
      Posted on October 5, 2011 at 8:09pm

      Are you kidding, its_time_to_arrest_our_government?!

      There’s many more offenses than stealing money! Stealing money is the least offense. There’s our government selling out our country, government deception to the people, government Constitutional violations, the government intent to collapse our economy, the government intent to divide the people, the government causing civil unrest, the governments on-going efforts to keep the people dependent on government, the government moving us towards a so-called one world government. And much more that is covert and overt.

      You got this right, its_time_to_arrest_our_government: When are We, The People going to wake up?!

      Report Post » David Zuckerman  
  • alcarfl
    Posted on September 28, 2011 at 4:58pm

    Flash! Two more Solyndra types were granted Federal loan gaurantees by executive order, just today. The Congress is off on a week’s vacation to recover from their month long vacation in August. Who’s watching the store? Cat’s away, executive order comes into play. When is the insanity going to end. No American can wait til 10/12. Impeach now. The man is completely out of control. It’s truly a mental health issue.

    Report Post »  
    • Anonymous T. Irrelevant
      Posted on September 28, 2011 at 5:09pm

      This Executive Order BS needs to stop, now. EO was never meant to be used the way this jerk is using it, and constantly, to get around Congress. Congress needs to step up and censure the president for using EO to bypass Congressional power. Obama will never get impeached as long as the Senate is held by Democrats and that will end in 2012.

      Report Post » Anonymous T. Irrelevant  
    • kraphtsman
      Posted on September 28, 2011 at 6:26pm

      The day after Obama’s replacement takes the oath of office, a NEW executive order should be issued by the President… IMMEDIATELY SUSPENDING EVERY SINGLE EXECUTIVE ORDER issued by the worthless POS currently dirtying the WH !

      Report Post »  
  • boca_chica
    Posted on September 28, 2011 at 4:56pm

    If I rmember correctly…didn’t the government give the “money” to the unions BEFORE the investors? And now they are giving it to the investors before the workers/tax payers? This is all about cronyism and they are obvious about it because the news won’t say anything. “I see Venezuala/Cuba from my house”.

    Report Post »  
    • broker0101
      Posted on September 28, 2011 at 5:03pm

      Solyndra was a Union Shop? Who knew. Idiot.

      broker0101  
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