July 30, 2012
By: John Clark
A group of shareholders who own a portion of Valence Technology, Inc. believe that California billionaire Carl Berg led the company into bankruptcy in order to take greater control of the company, according to a report from the Austin Statesman.
Sources say that the shareholders believe Berg, who is the chairman of the struggling manufacturer of lithium-ion batteries, filed for Chapter 11 bankruptcy so he could grab more control of the 23-year-old company.
It’s difficult to tell whether Berg is trying to increase his own power or simply save the company, and Berg and Valence are so intertwined that this question may be impossible to answer.
According to sources, Berg is the company’s largest creditor because most of the company’s major loans were provided by Berg himself. And since the collateral for those loans was the company’s property, Berg could leave the bankruptcy proceedings as the sole owner of the battery company, if the bankruptcy court decides to simply return those assets to Berg’s control.
And while bankruptcy attorneys for the shareholders have cried foul, Berg is quick to remind them that the company would not have survived if he hadn’t loaned more than $100 million of his own money to Valence over the past few years.
In response, though, shareholders have questioned why Berg stopped providing loans to the company when it was allegedly on the brink of finally earning a profit.
In the words of Michael Stavy, a Valence shareholder, the company’s owners were “presenting themselves as just about to break even and just needing some more money. Since Carl Berg was funding it all these years, why change now?”
Berg declined to respond to this question, but the shareholders who are challenging the bankruptcy filing believe it is a thinly veiled attempt by Berg to take full ownership of the company.
And if the shareholders’ objections do not carry any weight in bankruptcy court, they plan to file a securities lawsuit against the company, according to sources.
In the meantime, Berg and his mysterious motivations may remain on the sidelines, content to wait and see how the bankruptcy reorganization process will resolve itself.
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