Solyndra is a California-based solar panel manufacturer. In May of 2010, President Obama visited Solyndra, LLC, to announce that the company had received a $535 million federal loan guarantee. This week, the company announced that it will be filing for bankruptcy.
Solyndra’s bright future
Early last year, the federal government guaranteed a $535 million loan for Solyndra so the company could expand.In addition to President Obama, Solyndra served as host for the California Governor and a host of solar-technology bigwigs. Solyndra planned on manufacturing thin solar films to be used on building roofs and in urban areas to produce low-cost solar power. The company originally planned on using the government-backed loan to hire several hundred new employees and build a second manufacturing plant.
Solyndra shuts down in the face of competition
In January 2011, Solyndra announced plans to delay the opening of a new plant and the hiring of new workers. As of Wednesday, Aug. 31, Solyndra announced that it would be laying off 1,100 workers and filing for bankruptcy to stop collection on more than $1 billion of investors’ funds. Solyndra is the third solar-power plant in the United States to file for bankruptcy in the last several months. Over the last year, Chinese manufacturing plants have started developing solar panels and have dropped the price of panels by more than 40 percent; many U.S. firms simply could not keep up.
Questions about federal guarantee
Before Solyndra even filed for bankruptcy, there were questions about the federal loan guarantee. In May, the Energy Department disclosed that the loan package had to be restructured. The conditional commitment to back Solyndra was first signed by the federal government before full financial, legal or marketing reviews had been completed.
What the government will be responsible for
It is still not clear what portion of Solyndra’s more than $1 billion debt the federal government may be responsible for paying. The federal loan guarantee was for $535 million. It will not be until after Solyndra’s bankruptcy hearings, at which the government will be represented, that the exact responsibility of the government will be understood. What is known for sure is that this guarantee will put taxpayers on the hook for several million dollars.
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