The Work

October 31, 2011 5:04 PM

Brown Rudnick On Hand for Beacon Power Bankruptcy Filing

Posted by Brian Baxter

Almost two months after controversial solar panel manufacturer Solyndra sought Chapter 11 protection despite receiving a $535 million federal loan, another company that received taxpayer funds under a U.S. Department of Energy program has filed for bankruptcy.

Tyngsboro, Massachusetts–based Beacon Power filed for bankruptcy in Delaware on Sunday, listing assets of $72 million against $47 million in liabilities. Energy Department records show that Beacon received a $43 million federal loan in August 2010—substantially less than the $535 million loan at issue in the Solyndra scandal—to fund the construction of a 20-megawatt energy storage facility in Stephentown, New York.

Bloomberg reports that Beacon drew down $39.1 million on that loan, while receiving $29 million in additional grants from the federal government and Pennsylvania for other energy projects. Unlike Solyndra, Beacon, which makes backup power technology for power grid systems, continues to operate despite filing for bankruptcy. The company had been operating at a loss and revenues were unable to make up for the shortfall, Reuters reports.

Beacon has retained Brown Rudnick litigation and restructuring head William Baldiga and bankruptcy and finance partner Sunni Beville to handle its Chapter 11 case. Court filings by the firm show that Brown Rudnick partners are billing between $625 and $1,055 per hour, while associates are at rates ranging from $375 to $650.

The firm received $912,681 from Beacon in the year prior to the initiation of the Chapter 11 case. Brown Rudnick also received a $60,000 advance retainer to cover estimated fees and expenses from October 14 through October 30, according to court records.

Jeremy Ryan, a bankruptcy and corporate restructuring partner at Delaware's Potter Anderson & Corroon, is serving as cobankruptcy counsel to Beacon. The firm will also step in for Brown Rudnick when the latter has a conflict, according to a statement by Baldiga.

Potter Anderson has received a $25,000 retainer to help cover $17,422 in prepetition fees and expenses incurred by the firm in preparing Beacon's bankruptcy filing, according to a declaration filed by Ryan. Partners from the firm are billing between $465 and $640 per hour, counsel between $220 and $390, and associates at ranges ranging from $240 to $380.

According to a list of Beacon's 20 largest unsecured creditors, the company owes $711,872 to Edwards Wildman Palmer and $53,334 to Nixon Peabody. Nixon Peabody previously advised the Energy Department on the loan for the energy plant in Stephentown, according to a press release by the firm from September 2010.

Edwards Wildman Palmer, which renamed itself earlier this month after the completion of a merger, is standing outside corporate counsel to Beacon. The firm tops the list of Beacon's unsecured creditors with a claim "subject to setoff," meaning the amount can be reduced pending an agreement on other debts or assets between Beacon and its outside lawyers. (Edwards Wildman Palmer appears on nearly every major regulatory filing made by Beacon over the past few years.)

The first creditor Beacon will have to pay off is the federal government. The company got a bit of good news two weeks ago when the Federal Energy Regulatory Commission passed a new rule requiring power grids to pay more for frequency regulation services.

While that move benefits companies like Beacon, the White House has ordered an "independent analysis" of Energy Department loan programs that have invested federal funds in renewable energy, following the sudden collapse of Solyndra in September.

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