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Solyndra Liquidation Plan Effective

December 2012

Pachulski Stang Ziehl & Jones (“PSZJ”) played a pivotal role in successfully confirming a chapter 11 plan for Solyndra and its parent holding company in October 2012.  PSZJ faced three separate objections to the plan from the United States government and its agencies, which required a multi-day evidentiary proceeding before the United States Bankruptcy Court for the District of Delaware.

The most fervent objection faced by PSZJ attorneys came from the Internal Revenue Service.  The IRS challenged the plan as it applied to Solyndra’s parent company by attempting to preserve hundreds of millions of dollars of net operating loss carryforwards.  The IRS argued that the principal purpose of the plan was the avoidance of taxes. 

Prior to its filing for chapter 11 in September 2011, Solyndra was a leading manufacturer and retailer of solar photovoltaic power systems for large commercial and industrial rooftop applications.  Given the capital intensive nature of Solyndra’s technology and business model, the company had built up a substantial number of tax attributes.  Through the efforts of PSZJ and other professionals in the case, the bankruptcy court overruled the IRS’s objection to the chapter 11 plan, concluding that the plan had many purposes that had nothing to do with the issue of taxes.

The IRS subsequently appealed the bankruptcy court’s decision and sought a stay pending appeal from the United States District Court for the District of Delaware.  PSZJ attorneys successfully argued that no stay was warranted, which ultimately led the government to withdraw its appeal.  Solyndra has now fully consummated its chapter 11 plan.