Abound Solar Files for Bankruptcy After Winning Federal Loan
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Abound Solar Files for Bankruptcy After Winning Large Federal Loan

July 13, 2012

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Abound Solar Inc. has joined the growing list of solar panel manufacturers in the United States that are filing for bankruptcy, according to a recent report from Bloomberg News.

The company’s bankruptcy filing last week could ruffle some political feathers, as sources reveal that Abound received a guaranteed $400 million loan from the federal government before it had to file for bankruptcy protection.

Sources indicate that despite the government’s generous loan, Abound Solar’s products were simply too expensive to compete with other companies, and the firm has decided to suspend its operations while the bankruptcy court sorts out its financial troubles.

A statement released by the company blamed its financial ills on “[a]ggressive pricing actions from Chinese solar-panel companies” and said that startup companies like Abound Solar simply couldn’t compete in the “current market conditions.”

Of course, low-cost competition from overseas was not the only source of trouble for the Colorado-based solar panel company. Flattened demand for solar panels across the world also played a role in dropping the prices of the panels, as global energy consumers continued to prefer low-cost alternatives like coal, natural gas, and even wind.

The glut of solar panels in the international market and increased competition from China combined to slice the price of solar panels in half last year. This dramatic decrease in price forced Abound Solar to stop manufacturing new panels in February.

So Abound Solar seems to have collapsed in the face of larger economic forces beyond its control, but the company is not the only loser in the situation.

Sources say that U.S. taxpayers stand to lose between $40 million and $60 million on the loan that was granted to Abound Solar, although some of those losses may be recouped after the sale of the company’s assets.

And the collapse of Abound Solar comes on the heels of the heavily publicized demise of Solyndra LLC, which closed its doors last summer after receiving a $535 million guaranteed loan from the U.S. Department of Energy.

To put it mildly, the last twelve months have been a dangerous period for solar panel manufacturers that received loans from the federal government, and many of these companies are gaining an in-depth perspective on how bankruptcy works.


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