San Jose, CA – With the election campaigns heating up and both candidates for the presidency are slinging more dirt at each other than discussing their proposed long term and short term solutions to get out of the recession and drum up more employment; there are two issues that have been hounding President Obama and Mitt Romney: Solyndra and Bain Capital. It appears that wherever they take their campaign, everyone keeps on digging these bones in their closets. Let’s take a closer look.
The alternative energy company was heralded for its ingenious technology of generating cheap, renewable and environment friendly energy for the people of California. The company set up shop 17 miles off San Jose, in Fremont,CA.
Solyndra was able to attract investors like Argonaut Private Equity, CMEA Ventures, Kaiser Family Foundation, Rockport Capital Partners, Redpoint Ventures, Virgin Green Fund, Masdar & Artis Capital Management and Madrone Capital Partners just to name a few.
As bragging rights, they posted in $100 million in revenue back in 1999 and anticipated that by 2010, their revenues would reach $140 million due to the growth of its sales and production which then estimated to be between $1.76-2 billion dollars.
Enter President Obama … as part of his clean energy policy, he was convinced that Solyndra will generate new jobs (estimated to employ 3,000 people) and help him in his campaign sooner or later. A $535 million loan guarantee (courtesy of the taxpayer’s money) was granted to Solyndra by the United States Department of Energy as part of the conditional commitment to their cause. After federal reviews and press coverage provided by the White House about the advantages, The Federal Financing Bank (a branch of the Treasury Department) loaned Solyndra $527 million. Aside from that, they also received a tax break amounting to $25.1 million from CAEATFA or California’s Alternative Energy and Advanced Transportation Authority. Talk about receiving grants!
So everything is set; imagine a group of elementary boys gathered in the school yard so hyped up because they’ve just built their first rocket. They place the rocket at the center of the yard, light up the fuse cord. All of them holding their breath in great expectation, as the fuse cord burned and everyone is anticipating to see what a great explosion it can create but instead of that, after the fuse burned out it fell to the ground and KAPUT!
That is what happened to Solyndra, after all the hype and the extra push from the government; in August 31, 2011, the company filed for Chapter 11 bankruptcy, laid off 1100 employees without paying any severance pay, benefits, and paid vacation leaves owed to its employees. Solyndra just packed up the circus and left town. Of course, lawsuits followed naturally with all those upset employees.
After an FBI investigation on the operations of Solyndra, the bankruptcy court appointed Todd Neilson as Chief restructuring trustee/officer. In a Chapter 1 bankruptcy, a trustee is assigned by the court to manage the company in behalf of the debtors to make sure that profitability is re-established and the debtors get paid. Another Delaware bankruptcy judge awarded 20 disgruntled employees of the company close to $370,000 in bonuses. The original promise by Solyndra was $500,000 to more or less 21 employees.
Bain Capital is one of the world’s leading investment firms. They handle financial services and alternative asset management. Their biggest investors are pension funds and public employee unions like the University of California Retirement Plan and the California Teachers Retirement System (Casters).
Founded by Mitt Romney, Bill Bain, Eric Kriss and T. Coleman Andrews III in 1983, they set out to invest in companies, bail them out of potential bankruptcy and provide consultation to improve operations.
Bain Capital was a different entity from Bain & Company. Bain Capital is responsible for Staples Inc.; they invested on the office supply retailer turning it from one store to 2000.
But Bain’s investments were not always success stories, during the time Romney headed the company, 77 of the companies they have invested on filed for bankruptcy or ceased operations. Romney had been criticized for the his strategies and actions he took while at the helm of Bain because the company was more focused on getting back its investments while a lot of jobs were lost or no job was created at all. And because of this capitalism that Bain had been scrutinized when Romney had gotten into politics.
Apart from Bain, Mitt Romney also invested on a Solyndra-like company named Konarka. The solar cell company received $1.5 million while Romney was still governor in Massachusetts. Konarka was also able to obtain $20 million worth of grants from the government. After 11 years, it filed for Chapter 7 bankruptcy.
Moving forward, Obama and Romney’s campaigns are heating up and both are continuously criticizing each other for the bad decisions and poor handling of affairs that they’ve done in past. With all this mudslinging, it looks more of a cat fight rather than thinking of way to address the actual more critical issues. But both of their fates will be decided come Election Day …