Aftermath of Solyndra’s bankruptcy

A component of the American Recovery and Reinvestment Act of 2009 was the Innovative Technology and Loan Guarantee program. This program set aside $6 billion in loan guarantees for renewable energy start-ups.

These loan guarantees, administered by the Department of Energy (DOE), had two purposes:

• Create employment
• Develop commercial technologies to avoid and lower pollutants and the production of greenhouse gases

One of the loans made under this program was a $535 million line of credit to Solyndra, a company with offices in California. Solyndra, a solar panel-maker filed for bankruptcy in 2011. Hardworking employees went to work one day and suddenly found the doors locked. Congressional hearings scrutinized the DOE’s decisions to give Solyndra the loan.

How will Solyndra’s bankruptcy affect government investments in renewable energy? The company was once praised by government leaders. No one would have guessed the black swan.

The Solyndra failure is an example of how government efforts to invest in green development can go wrong. When lawmakers need to balance the budget, any spending on a company failure may look like misspending of tax payer money. This creates scrutiny by Congress. There are already claims of political favoritism towards Solyndra.

One view may be to discontinue loan subsidies for renewable energy projects. However, the individual success of Solyndra was not the purpose of the DOE loan. The DOE program was meant to invest in technology, not particular businesses. For every business that opens, there will be many that fail. The few successes drive technological development, creates jobs, leads to less expensive, efficient, and wide-spread renewable energy.

To get through a bankruptcy, engage a reliable New York bankruptcy attorney. An entrepreneur stays an entrepreneur – a bankruptcy filing does not put an end to ideas. Bankruptcy may not really mean failure. When one company tries, others follow. Through it all a winner comes out that drives the market to develop. A fresh start opens new opportunities.