NEW YORK--(BUSINESS WIRE)-- Officials of UNITE HERE, a hospitality workers union with 250,000 members, have taken the unusual step of publicly denouncing a proposed bankruptcy reorganization plan.
They are in part reacting to conservative politicians denouncing the millions in federal subsidies and loan guarantees given to Solyndra, the Fremont, CA-based solar cell company which filed for bankruptcy in September 2011. Mitt Romney referred to it in this past Wednesday’s presidential debate, and also held a campaign event in front of Solyndra’s shuttered factory gates.
“What has usually been missing from this past year’s commentary is that much of Solyndra’s funding came from private sources. Prominent among them is Madrone Capital, a private equity firm which acts as an investment arm of the Walton family fortune. The Waltons are active supporters of Republicans,” noted UNITE HERE Secretary-Treasurer Sherri Chiesa. She also noted the connection to Hyatt Hotels. “Madrone’s co-managing partner Greg Penner is a director of Hyatt Hotels, controlled by the prominent Pritzker family,” Chiesa explained.
Solyndra’s creditors are now voting on the company’s proposed bankruptcy plan (October 10th is the voting deadline). The plan, if passed, will heavily benefit Madrone and other major investors at the expense of Solyndra’s smaller creditors and the federal government, which will likely recoup only 3 cents and less than 19 cents on the dollar, respectively. UNITE HERE General Counsel Richard McCracken noted, “In principle, bankruptcy plans are supposed to protect creditors over shareholders because shareholders get all the upside if a company does well – that is part of the inherent risk in making an equity investment.” But Solyndra’s plan would give these investors all of this Company’s tax credits. These tax credits are likely worth $318 million to $352 million, according to the bankruptcy disclosure statement. For these credits, investors Madrone and Argonaut would pay at most $10.2 million (most of which is accompanied by assigning them various claims).
Madrone’s co-managing partner Greg Penner is a current Wal-Mart director, a former Wal-Mart executive and the current husband of Carrie Walton (daughter of Wal-mart’s Rob Walton). According to Enphase Energy, “Madrone invests on behalf of members of the Walton Family” (Madrone general partner Jamie McJunkin sits on the Enphase board). Penner also sits on the boards of Hyatt Hotels Corporation, Baidu (the Chinese search engine company similar to Google) and 99Bill Corporation (the Chinese online payment platform company similar to PayPal).
“With that kind of profile, there can be little doubt that Madrone and Penner can afford to give Solyndra’s creditors and the American taxpayer a better share of Solyndra’s unused hundreds of millions in tax benefits,” Chiesa noted.
On October 17th, the proposed plan will go before a judge in a Wilmington, DE federal bankruptcy court hearing. It is unclear as of now whether Solyndra’s creditors or the federal courts will ultimately uphold the proposed bankruptcy plan. “In the interest of taxpayers like our Union’s members and Solyndra’s creditors alike, this deal does not deserve to see the light of day,” Chiesa concluded.
Ben Mantle, 315-783-9412
Source: UNITE HERE