We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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The Loveland-based solar-panel manufacturer has been dissolving operations as part of its Chapter 7 bankruptcy, leaving multiple creditors, investors and others on the hook. Abound’s insolvency, declared early last month, is among Colorado’s largest corporate bankruptcies in recent memory.
In new papers filed with the court late last month, Abound also revealed just how much its business had fallen.
Abound reported 2010 sales of $26 million. It said sales dropped to $22 million last year and plummeted to just $1 million this year.
Of its liabilities, $70.9 million is owed to the U.S. Department of Energy.
Abound had drawn down approximately that amount on a $400 million loan guarantee from the energy department. Taxpayers will lose $40 million to $60 million of that amount, the energy department has said.
Abound also had raised more than $300 million in private equity financing before it declared bankruptcy last month, according to the energy department.
The company’s filing lists liabilities of $1.5 million owed to creditors holding unsecured, priority claims. Creditors holding unsecured, “non-priority” claims are owed $9.6 million.
Among those unsecured, non-priority claims is Winter Park resident Mike Sargent’s $1.2 million investment in the company, made through his family’s Arrowhead Loop Investments. Sargent told the Business Report he invested in every Abound funding round since 2007.
A 73-year-old retired certified public accountant and investment manager, Sargent thought the opportunity had the greatest potential of any investment he had seen in his 50 years in business.
He still believes in the company. “The technology is still extremely good,” he said.
Sargent will seek his share of Abound’s assets to recoup his investment. If he does not receive repayment, he said he will seek to take a tax deduction related to his capital losses.
And he said he will not invest in solar again – if the government is involved.
“You can’t trust them because of politics,” he said.
Abound has blamed the Chinese government for its woes. It and other U.S. solar manufacturers have found it difficult, if not impossible, to compete against heavily subsidized Chinese competitors.
BP Alternative Energy, whose investment portfolio totals $150 million and some 30 investments, will continue to invest in solar, depending on the company, spokeswoman Sarah Howell said.
BP, whose total investment is listed as “unknown” in Abound’s filing, declined to disclose the amount to the Business Report.
“BP had been a minority investor in Abound Solar through our ventures business that invests in a range of emerging technology start-ups, not all of which, by definition, will necessarily succeed,” Howell said.
Another investor whose name can be found in the bankruptcy filing is Fort Collins’ Bohemian Cos., owned by billionaire Pat Stryker.
The document, however, does not include an amount for Bohemian and a spokeswoman declined to comment.
Abound declared $131.9 million in machinery, fixtures, equipment and supplies as assets. Abound’s $24 million facility in Tipton, Ind., where it planned to add hundreds of workers but never did, represents the company’s largest asset, according to the filing.
The company also reported $3.8 million in inventory, which consisted of numerous crates of solar panels.
The company’s accounts receivable totaled just $342,000.