Ener1 files for Chapter 11

Advanced battery maker Ener1 (OTC: HEVV) announced yesterday that it has “voluntarily” entered Chapter 11 bankruptcy, and reached agreement with its creditors on a restructuring plan. The firm’s EnerDel unit, which builds lithium-ion batteries for EVs, is not part of the reorganization, and according to the company, “is not expected to be adversely impacted by the legal proceedings.”

Ener1 is one of several battery makers that have received pots of money from the DOE. If the company does go down the tubes, it could be an embarrassment for the Obama administration, which has strongly supported the high-tech energy and transportation industries (Ener1 also received millions in grants under the Bush administration). The battery business is growing fast, but is highly competitive – analysts have noted that Ener1 is up against much larger competitors, including Panasonic and Johnson Controls.

CEO Alex Sorokin discussed some of the reasons for the setbacks. “Our business plan was impacted when demand for lithium-ion batteries slowed due to lower-than-expected adoption for electric passenger vehicles. That pressure was exacerbated by volatility in the debt and equity markets that further limited our borrowing ability and the loss of a major customer, Think Global, which filed for bankruptcy in June 2011, and for which we were exclusively providing commercial lithium-ion battery packs. We believe that the restructuring plan will enable us to address our business and financial challenges comprehensively, quickly and efficiently, and position us to compete much more effectively in the energy storage market.”

 

Image: Ener1