By Tom Hals and Dan Levine
Oct 10 (Reuters) - Eight months before solar panel makerSolyndra filed for bankruptcy, the company's politicallyconnected backer sought to hold on to lucrative tax breaks inthe event the company went out of business, according to courtdocuments.
The new information was revealed on Wednesday by the U.S.Internal Revenue Service, which filed an official objection toSolyndra's bankruptcy reorganization plan.
The failure of Solyndra, the company President Obama held upas an example of government backing for renewable energy jobs,is a political weapon for Republicans ahead of the Novemberelections as they highlight energy policies more favorable tofossil fuels.
Solyndra filed for Chapter 11 protection from creditors onSept. 6, 2011, as it and other solar panel companies were hurtby a flood of cheap imports from China that drove down prices.
The company has auctioned virtually everything frominventory, office equipment and real estate to repay its debts,but may prove unable to pay any of its unsecured creditors.
Solyndra's bankruptcy plan could prove a furtherembarrassment to the administration if it is seen rewardingrisk-driven venture capitalists ahead of unsecured creditorssuch as suppliers and laid-off staff.
In its court filing on Wednesday, the IRS opposed Solyndra'splan. If approved by creditors, a holding company would emergefrom bankruptcy with no employees or business operations - butas much as $350 million in tax breaks that could be used bySolyndra's investors, including Argonaut Ventures.
Argonaut is the investment arm of a foundation tied to theDemocratic fundraiser, Oklahoma billionaire George Kaiser.
Most of the tax breaks would come in the form ofNet Operating Losses (NOLs) which could be used to offset futuretaxable income.
Meanwhile, under the bankruptcy plan Solyndra's creditorswould receive pennies on the dollar, the IRS said, adding thatthe principal purpose of the plan is "tax avoidance."
A Solyndra spokeswoman said the company would fileresponsive papers but otherwise declined to comment.
The company filed for bankruptcy in September 2011, but itsinvestors feared a potential liquidation as early as December2010 if it could not convince the Department of Energy torelease additional loans for the company, according to the IRSfiling.
The IRS cited emails from Kaiser to one of the venturefirm's managing directors.
"I would go a long way to preserve the NOLs," Kaiser wrotein December 2010.
As Argonaut, Solyndra and its tax professionals worked todetermine the amount of tax breaks available to Solyndra, thecompany's chief financial officer was advised to delay aparticular transaction which would have reduced the availableNOLs by $100 million, the court filing said.
A representative for Kaiser could not immediately bereached.
Solyndra has said in recent court filings it may not be ableto repay any of the $528 million that the U.S. government hadlent in 2009 to promote clean energy businesses.
Republicans have seized on Solyndra's failure to accuse theWhite House of rushing the $528 million loan in part to help theventure capital backers. The Obama administration has said theloan was based on the merits of Solyndra's business prospects.
The case in U.S. Bankruptcy Court, District of Delaware isIn re: Solyndra LLC et al., 11-12799.
(Reporting by Tom Hals in Wilmington, Delaware and Dan Levinein San Francisco; Additional reporting by Nichola Groom in LosAngeles; Editing by Richard Chang)
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Keywords: SOLYNDRA TAXES/FILING