As part of its bankruptcy proceedings, defunct solar company Solyndra will auction off thousands of items from its California production facility on Nov. 2 and 3. But taxpayers won’t see a dime of the proceeds, due to the Energy Department’s decision to subordinate taxpayers to Solyndra’s private financiers in repayment of their investments.
As I explained in a Friday column in the Washington Examiner, DOE has developed an unprecedented interpretation of the law to allow Solyndra’s private investors to recoup $75 million of their investment before taxpayers are repaid.
Heritage Global Partners, which is conducting the auction, told Scribe that the money raised “will not be anywhere near” $75 million, meaning the proceeds will go entirely towards repaying Solyndra’s private investors (though later asset sales may exceed that threshold).
DOE’s legal position is without precedent in the history of its loan guarantee program, as I explain in the Examiner:
Two Treasury Department officials who testified before a House Energy and Commerce subcommittee last week said they had never before seen taxpayers subordinated to private investors in the repayment of a government loan.
Until Solyndra, that is. In February 2011, the Energy Department helped refinance the struggling solar company’s loan in a way that gave private lenders priority in repayment of their loans.
Under the restructuring agreement, the first $75 million of private investment would be repaid before taxpayers saw a dime. Reps. Fred Upton, R-Mich., and Cliff Stearns, R-Fla., who chair the House Energy and Commerce Committee and its investigative subcommittee, respectively, said the restructuring agreement “violated the plain letter of the law.”
The upcoming asset sale includes thousands of pieces of office equipment, computers, power tools, assembly line machinery, and even solar panels. But because the expected returns from the auction do not exceed $75 million, the government won’t recoup any of the taxpayer money used (unsuccessfully) to prop up the company.
*****UPDATE: Contacted about these revelations, Rep. Cliff Stearns (R-FL), who chairs the House Energy and Commerce investigative subcommittee, called the news “a sobering reminder that taxpayers are on the hook for a half billion dollars because of DOE’s misdeeds.”
Source material can be found at this site.