Indiana Car Manufacturer Crippled by Lawsuits Files for Bankruptcy
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Indiana Car Manufacturer Crippled by Lawsuits Files for Bankruptcy

June 21, 2013


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Carbon Motors Corp., a company that planned to build futuristic police cars at a plant in Connersville, Indiana, is filing for Chapter 7 bankruptcy, according to a report from the Indianapolis Business Journal.

Sources say the company owes $21.7 million in debt, and according to documents filed with the U.S. Bankruptcy Court in Indianapolis, it has less than $19,000 worth of assets.

The paltry list of assets includes a few items of furniture, some books and records, the company’s intellectual property, and a prototype police car that the firm was slated to build.

The company reportedly decided to seek bankruptcy protection after it failed to procure a $310 million loan from the U.S. Department of Energy, which has recently been investing in green automobile technology.

But a series of missteps by the federal government has made it more reluctant to invest in young car companies, which may have led to the decision to let Carbon Motors stand on its own. This failure sent the company into a tailspin, sources say.

According to the firm's attorney, the "entire business model was premised on that entire loan coming through," and the failure "was a huge, unexpected disappointment for management as well as the investors."

Indeed, the company must contend with several investors who gave millions of dollars to the company and are unlikely to recoup all of their losses.

According to sources, the biggest creditor may be Chicago billionaire Joe Mansueto, the founder of an investment research firm who gave Carbon Motors $3.6 million in anticipation of future success.

The company also owes a significant amount of money to BMW, the iconic German car company, and Inteva Products, both of which gave millions of dollars in supplies to Carbon Motors.

Sources note that Carbon Motors is facing a lawsuit by three former executives seeking unpaid wages, and the decision to file for bankruptcy may help delay this lawsuit indefinitely.

But sources believe the company, which once planned to hire as many as 1,500 workers to build its high-tech police cars at its Connersville plant, will likely close its doors as soon as the bankruptcy is completed.

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