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State of Michigan says bankrupt battery maker can’t transfer tax credits

A123 Systems Inc.'s battery manufacturing facility in Livonia, Michigan. The company filed for bankruptcy on Tuesday.
A123 Systems Inc.
A123 Systems Inc.'s battery manufacutring facility in Livonia, Michigan.

The State of Michigan says the new owner of bankrupt battery maker A123 Systems cannot get the company's state tax credits.

In April, 2009 the state awarded a “high-tech state tax credit” worth a little more than $25 million over 15 years and a “battery cell state tax credit” worth $100 million over four years

China’s Wanxiang Group (specially, one of it's American-based subsidies) bought most of A123 Systems' assets for a little more than $250 million. A123 says those assets include the state tax credits for two battery plants in Romulus and Livonia.

But the state disagrees.

In a court filing this week, the state argues those tax credits cannot be transferred from company to company. Plus, it notes, the tax credits were based on the Michigan Business Tax, which Governor Rick Snyder has already repealed. A hearing is set for later this month.

A123 Systems declined to comment. The Michigan Economic Development Corporation, on behalf of the Michigan Strategic Fund, filed the objection with the assistance of Michigan’s Attorney Generals’ office. A MEDC spokesman also declined to comment, as did the AG’s office.

Lower than expected demand for lithium ion batteries in electric vehicles and a recall caused the company’s bankruptcy.

In 2009, the battery maker was awarded roughly $249 million as part of the federal stimulus package. It hasn’t drawn down all of that money. The company has agreed not to take any more of that grant money as part of the bankruptcy protection.

Lindsey Smith is a Peabody Award-winning journalist currently leading the station's Amplify Team. She previously served as Michigan Public's Morning News Editor, Investigative Reporter and West Michigan Reporter.
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