A123 Systems disclosure statement for liquidation plan draws objection

By Jim Witters

Wilmington, Del., March 11 - A123 Systems, Inc.'s disclosure statement for its joint plan of liquidation drew an objection from creditor Fisker Automotive, Inc., according to documents filed March 11 with the U.S. Bankruptcy Court for the District of Delaware.

Fisker holds general unsecured claims in the case totaling $139.9 million.

A123's disclosure statement does not contain essential information a voting creditor needs to make an informed judgment about the plan, Fisker claimed.

Specifically, Fisker said:

• The debtors did not sufficiently elucidate the circumstances leading to the Chapter 11 filing, particularly how defective prismatic cells in A123 batteries contributed to the filing and how the issue is addressed in the plan;

• The potential delays in the distribution of funds and the potential reduction in distributions "is inadequate to alert creditors to the full nature and extent of the risk to the estimated recovery they are led to believe they will receive";

• The information about the disputed claims reserve fails to set forth the amount of cash to be deposited; and

• The statement does not provide specific information about potential claims or causes of action the debtors or the liquidating trust may pursue.

Fisker is asking the court to deny approval of the disclosure statement unless these deficiencies are addressed by A123.

A hearing to consider the adequacy of the disclosure statement is scheduled for 10 a.m. ET on March 13.

Based in Waltham, Mass., A123 designs, develops, manufactures and sells rechargeable lithium-ion batteries and battery systems. The company filed for bankruptcy on Oct. 16 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 11 case number 12-12859.

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