On August 29, 2012, Reuters reports that the U.S. Trustee became the latest government agency to critize Solyndra LLC’s plan to repay its debts, saying the bankrupt solar panel maker should disclose whether it is favoring venture capital investors over creditors.
Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before seeking bankruptcy protection, filed a Chapter 11 reorganization plan on July 20, 2012.
The plan, filed in U.S. Bankruptcy Court in Wilmington, Deleware, provides for holders of allowed administrative expenses and priority claims to be paid in full, and assets of Solyndra will be vested in the Solyndra Residual Trust. Holders of Solyndra’s general unsecured claims, valued at $50 million to $120 million, are expected to recover from 2.5 percent to 6 percent, according to a disclosure statement filed with the plan.
The plan’s sponsors are identified as Argonaut Ventures I LLC and Madrone Partners LP. Argonaut Ventures is the investment arm of billionaire George Kaiser’s charitable organization. The Fremont company sought Chapter 11 protection in September 2011 just days before its offices were raided by the FBI seeking evidence of possible fraud. The company fired more than 1,000 workers.
With this reorganization plan where are the provision for employee ownership? There are none/
The government, through the stimulus program, has been giving taxpayer grants to companies with the goal of generating “employment.” For the most part these are not loans or loan guarantees, thus there is no provision for a first-position recoupment position. There is no employee ownership stipulation. The government should always require broadened ownership, in companies the financial assist, of the productive capital assets among the employees, who would pay back their acquisition of ownership out of the earnings of the investment.
While financial support from the government is the purpose of the stimulus program, the structure of the support should be in the form of insured loans as restructuring and investment capital. Such a financial mechanism should be put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich.
Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.
The companies receiving such financial support should always qualify as succeeding companies within a major industry with long-term productivity growth potential with the resulting benefit of promoting the diffusion of advanced technology into civilian industries. The loans should be used to modernize and build new superautomated and computerized robotic assemblies. Where necessary the monies should be used for supplemental retraining of labor workers to qualify them for the new jobs created. Most important, the profits from the investments should be fully paid out to new capitalists owners––the corporate employees. This should be a condition to receive the capital investment loans. The goal would be to create new capitalist owners simultaneously with the growth of the economy financed with government loan support. The profits would represent wealth created by public capital invested in such companies and industries.
The desired result would be to decrease, rather than increase, the existing concentration of productive capital ownership and thus economic power in the hands of a minority. The credit mechanisms supported by the government would not involve the expenditure of any tax money and would support profit-making operations for the primary purpose of earning dividends for the companies’ stockholders, including the newly created capitalist owners. Businesses supported by such credit mechanisms would have a profit motive and operate with the requirement for efficiency imposed by a market economy.
The goal would be to broaden the ownership of private corporations so as to make the interests of private industry more synonymous with the public interest and vice versa––while broadening private enterprise capitalism to include everyone in the society. Such policies and programs aimed at broadening productive capital ownership would foster extensive utilization of the most modern and efficient technological innovations and result in the revitalization of American free-enterprise capitalism mirrored in a strong growth-projected economy.
http://in.reuters.com/article/2012/08/29/solyndra-bankruptcy-trustee-idINL2E8JT53M20120829
