There has been a movement in recent years to move away from coal and petroleum-based energy and toward renewable energy. When Barack Obama was elected president, he advocated for a huge financial boost for the “green” industry. Shortly after taking office, the program’s wheels began to fall off when Solyndra declared it was filing for bankruptcy. The business seemed to be struggling to compete in the solar panel industry against fiercely aggressive Chinese firms. As a result of the economic crisis, sales in the entire sector have plummeted. Thanks to a $535 million loan guarantee from the federal government, the widely publicised bankruptcy filing was closely watched. To learn more about this check out here
It didn’t stop there; in July 2012, Abound Solar filed for bankruptcy, leaving taxpayers responsible for $70 million in loans. Liabilities for this solar business were projected to be between $100 million and $500 million. In reality, this was one of Colorado’s largest corporate bankruptcy filings ever. Initially, the company stated that it will reorganise under Chapter 11 bankruptcy, but it has since switched to Chapter 7 bankruptcy. Abound Solar recently announced that it would file for Chapter 7 bankruptcy, suspending operations and dissolving.
These federally funded loans are going to solar companies as well as renewable energy companies such as Nevada Geothermal Power. Nevada Geothermal Power was struggling and not financially solvent when it secured a $98.5 million federal loan guarantee. This loan seems to have been more of a bailout than an investment. Nevada geothermal, according to Congressman Jim Jordan, a Republican from Ohio, was already in serious financial trouble before the federal loan guarantee.
The company’s ability to continue as a going concern is reliant on its ability to raise funds to finance business operations and the acquisition of other assets. As a result, there are material and certainties that cast considerable doubt on the company’s ability to continue as a going concern.