Michigan’s attorney general is objecting to bankrupt A123 Systems Inc.’s plan on how to pay back its creditors, saying that it calls for the improper transfer of $125 million in tax credits provided by the state, Reuters reported yesterday. The objection represents the latest wrinkle in a difficult and politically charged chapter 11 process for A123, the lithium-ion car battery maker that got $249 million in federal grants. Michigan Attorney General Bill Schuette filed his objection on Wednesday in bankruptcy court, reiterating concerns he first raised in November over the proposed credit transfer. The company is seeking to shift $125.3 million in Michigan tax credits to the U.S. unit of Wanxiang Group, which acquired Waltham, Mass.-based A123 in January. Michigan had provided the credits in 2009 as incentives for A123 to construct facilities in the state and create jobs for Michigan residents. A123 made headlines again in January, when its $260 million deal to sell itself to Wanxiang’s U.S. unit was met with warnings from some lawmakers that the deal would transfer sensitive technology developed with U.S. government money to a foreign-owned company. The U.S. government approved the deal on Jan. 28. The case is A123 Systems Inc., U.S. Bankruptcy Court, District of Delaware, No. 12-12859.
