Abound Solar bankruptcy to cost taxpayers up to $60 million

LOVELAND – Solar-panel maker Abound Solar will close its doors and file for bankruptcy next week, a collapse that will cost taxpayers $40 million to $60 million, the U.S. Department of Energy said Thursday.

An Abound spokesman said it was unclear immediately whether the company planned to file to reorganize through Chapter 11 or liquidate under Chapter 7.

Abound said it tried to find a buyer but failed to come to terms with any potential acquisition group.

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The energy department said the market for solar panels conspired against the company.

“When the floor fell out on the price of solar panels, Abound’s product was no longer cost-competitive,” energy department spokesman Damien LaVera wrote on the federal agency’s website. “As a result, the company was unable to meet some of the financial milestones built into the loan agreement to protect the taxpayers and – in September 2011 – the Department halted disbursements on the loan.”

By then, the company had drawn down $70 million on a $400 million loan guarantee from the energy department.

The energy department expects total taxpayer losses at 10 to 15 percent of the $400 million loan once bankruptcy liquidation is complete, LaVera said. That would equal $40 million to $60 million.

“While disappointing, this outcome reflects the basic fact that investing in innovative companies – as Congress intended the Department to do when it established the program – carries some risk,” he said.

In February, Abound announced that it temporarily would slash 180 jobs and lay off another 100 temporary workers. It also put off opening a new factory in Indiana and stopped making its first-generation thin-film photovoltaic modules.

Abound is expected to lay off its remaining 125 workers when it files for bankruptcy.

“Abound has been in discussions with potential buyers over the last several months, but ended negotiations when the involved parties were unable to come to an agreement on terms,” the company said.

The company blamed “aggressive pricing actions from Chinese solar panel companies” that “made it very difficult for an early stage start-up company like Abound to scale in current market conditions.”

The company supported recently imposed import tariffs, “but this action is unfortunately too late for the company.”

Walt Elish, chief executive officer of the Northern Colorado Economic Development Corp., said the renewable energy industry in Northern Colorado remained strong despite the failure of one company.

“I’m not sure this sends a message for the whole industry,” he said.

Jason Bane, spokesman for Boulder-based environmental group Western Resource Advocates, agreed, saying that solar energy still makes up a significant portion of Colorado’s energy usage.

“It’s unfortunate for those people who are losing their jobs, unfortunate for the company, but I don’t think it means anything more than that for Colorado or renewable energy in general,” he said.

But the industry’s troubles extend beyond Abound’s upcoming bankruptcy filing.

For example, Danish wind turbine giant Vestas, which has manufacturing facilities in Windsor, Brighton and Pueblo, announced 2,335 global job cuts in January. It warned that an additional 1,600 layoffs could occur nationwide if Congress fails to tax breaks for renewable energy.

Another solar-panel maker, California-based Solyndra, went bankrupt in 2011, leaving taxpayers on the hook for $535 million in loan guarantees.