Solyndra's Bankruptcy: Case Study

Another legal issue that Solyndra faced was the reorganization plan for bankruptcy. The IRS filed objections against the plan stating “The undeniable conclusion is that tax benefits drive this plan”. IRS investigations found that Solyndra’s investors creased shell companies to avoid paying taxes up to $350 million, with George Kaiser in the front row again. “The only reason for the shell corporation to exist post-confirmation is to enable its owners to exploit these tax attributes, which would be lost in liquidation,” the IRS argued in court papers.( McElhatton, J. ) Attorneys argued that the even as far back as 2010 Solyndra planned to use net operating losses to off future tax liabilities while at the same time approaching the government

If the case were to go to court it could cost upwards of $15 million plus attorneys fees but they are only seeking a settlement of $3.5 million in the middle of Solyndra’s bankruptcy court filings there were still preceding at the time. (McElhatton, J) Another question that taxpayer and other government officials were seeking to get answered is that if there was criminal intent in how the financials for Solyndra were handled. Some feel that Solyndra cost taxpayer a half-billion dollars while misleading federal officials, omitting or stating financial information that was misleading, and seeking more money form a government loan. One of the statement from Solyndra was that they had contracts to sell over $2 billion in solar panel over 5 years when in truth Solyndra was struggling to find sales with their high priced panels and ended up creating secret side deals and lower

This act is supposed to ensure taxpayers will never pay hundreds of millions of dollars because of government risky bets. The act will phase out flawed loan programs under the Energy Policy act after December 31, 2011.Admendments to the process of guarantee loans are now also in place because of the No More Solyndras Act including a written analysis of financial terms and conditions prepared by the Secretary of Treasury to be submitted to the DOE and if the DOE finds inconsistencies, it is to provided to Congress in a written report noting all discrepancies. There is now also greater loan guarantee transparency and now the DOE, executive branch officials, and policymakers can be held accountable by imposing penalties, removal from office, suspensions, and fines for violating the new law(The No More Solyndras