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A123 Files For Bankruptcy; Sells Auto Assets To Johnson Controls (Updated)

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A123 Systems has filed for bankruptcy protection in federal court in Wilmington, Delaware, Bloomberg reports. Late yesterday, the battery company had warned that it was about to default on several loan issues, noting that a bankruptcy filing was a possibility; but it still seems startling to see them file just hours later.

A123 makes rechargeable lithium-ion batteries for electric cars. The company has been hurt by the slow development of the electric car market.

Don't be surprised to see this turn into a Solyndra-style political football; A123 had received $249 million in grants from the U.S. Department of Energy.

A123 this morning is down 14 cents, or 57.9%, to 10 cents.

Update: A123 this morning said that it has agreed to sell its automotive business assets, including facilities in Livonia and Romulus, Michigan, its manufacturing facilities in China and its stake in the joint venture Shanghai Advanced Traction Battery Systems Co., to Johnson Controls for $125 million.

A123 said it "continues to engage in active discussions regarding strategic alternatives for its grid, commercial, government and other operations, and has received several indications of interest for these businesses."

The company also confirmed that it filed Chapter 11 this morning as part of a process to "maximize the value of its assets for its stakeholders in a controlled, court-supervised environment." The company said Johnson Controls had agreed to provide $72.5 million of debtor-in-possession financing to support the company during the sale process.

A123 is now down 17 cents, or 70.8%, to 7 cents.