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ECOtality files for Chapter 11; seeking approval to sell all assets
17 September 2013
EV charging solutions company ECOtality, Inc. and its US subsidiaries yesterday filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Arizona, according to the company’s latest 8K filing with the Securities and Exchange Commission. ECOtality and its subsidiaries intend to seek approval of the Bankruptcy Court of an auction and sale of substantially all of their assets under section 363 of the Bankruptcy Code.
The companies have proposed to jointly administer their Chapter 11 cases under the caption In re Electric Transportation Engineering Corporation, dba ECOtality North America, Case No. 2:13-bk-16126-RJH. All documents filed with the Bankruptcy Court are available for inspection at the Office of the Clerk of the Bankruptcy Court.
In connection with the filing, ECOtality and its subsidiaries entered into a Credit and Security Agreement with Nissan North America. Under the terms of the Credit Agreement and subject to approval of the Bankruptcy Court, Nissan will make available a delayed draw term loan in an amount up to $1,250,000. (Nissan was major partner in the EV Project with ECOtality.)
The borrowers will use the loan to (i) fund operations until the asset sale; (ii) to fund $27,000 for the operations of the stores and portable subsidiaries; and (iii) to pay certain administration costs necessary to maintain the corporate existence.
ECOtality previously executed several EV Pilot Program Master Agreements under which the it installed Level 2 chargers and DC Fast Chargers in connection with the EV Project with the Department of Energy. (Earlier post.) Under the terms of those agreements, the filing of a case under the Bankruptcy Code qualifies as a cause for termination of those agreements, under which ECOtality could be required to remove installed chargers at its own expense.
The DOE had awarded about $115 million to ECOtality, of which about $96 million has already been paid.
In August, ECOtality had notified the DOE that, even though it was continuing to pursue options for additional financing and was exploring other alternatives, in the event additional financing was not obtained,it might not be able to fulfill its operational obligations, including under the EV Project. In response, the DOE suspended all payments under the EV Project while it investigates the situation and determines whether the award should continue.
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