Automotive News reports A123 Systems, an electric vehicle battery manufacturer, received a disbursement check from the federal government on the same day the company filed for bankruptcy. On Oct. 16, A123 received $946,830 as the latest portion of a clean energy grant from the US Department of Energy. That was the same day A123 Systems filed for Chapter 11 bankruptcy protection following a failed attempt to secure funding from Chinese parts supplier Wanxiang Group. Of the original grant, $115.8 million is still outstanding, and despite the company's monetary woes, A123 Systems says it may still need the grant to update or expand its manufacturing capacity.
Republican Senators John Thune and Chuck Grassley wasted no time blasting the disbursement check as careless spending. The two issued a statement saying, "The Department of Energy needs to answer for why it appears to put federal grants on auto-pilot to the detriment of US taxpayers. This can't stand."
The Department of Energy, meanwhile, responded by saying the grant program requires companies to submit invoices detailing their progress toward predetermined goals before any funds can be issued.