Solyndra Company fall

246 views 9 pages ~ 2323 words
Get a Custom Essay Writer Just For You!

Experts in this subject field are ready to write an original essay following your instructions to the dot!

Hire a Writer

Solyndra is a renewable energy company headquartered in Fremont, California. Dr. Chris Granet formed the start-up business in 2005. Because of its one-of-a-kind production, the company was valued highly. It used copper indium gallium selenide to make tubular solar panels, as opposed to other companies that used less efficient conventional flat panels. In 2009, the corporation received a large loan from the United States Department of Energy (Caprotti, 2016). The company received 0.5 billion dollars. The funds were intended to aid in the building of a new plant. It was clear that the current solar panel would be in high demand. Rozell and Epstein (2015) point out that the White House also showed their support by facilitating the company to obtain the massive loan. Despite the company's innovative technology, after one day, the corporation filed for bankruptcy. As a result, the manufacturing was stopped, and a hundred workers were dismissed. There were various causes of this issue. The first problem was that the process of production was dear. The other issue was the significant increase of competition from the manufacturers from China who produced cheaper products. The corporation eventually lost the chance to survive, when the administration disagreed with the additional cash request.

Nwosu (2013) argues that the step made was unreasoned and led to the loss of huge amount of money from the taxpayers. There were various ethical and legal issues which portrayed the plan as a grave mistake in management planning since connected situation that contributed to bankruptcy could be addressed in a better way. For efficient analyzing of the complicated issue, it is important to utilize the philosophy of the economist Milton Friedman, which can be applied in this case.

When Solyndra Company filed for bankruptcy, the department of justice and prosecutor's office started to investigate it. It took ten weeks to complete the inquest, and some questions need to be answered. The first question was whether the company's management had the intention of leading the corporation to bankruptcy. The next task was to determine why the company could not handle the difficulties even after receiving the huge loan and operated for only two years after the energy department of the United States transferred the money. Furthermore, the legislative acts were more than two which can be utilized in the condition and ethical codes which ought to have been employed (Nwosu, 2013).

The legal background of the case proved to be complex since analyzing the management process of the company was very difficult. More so, verifying the information was also hard because Solyndra's executives made sure that the company is safe. Also, the bankruptcy occurred because of reasons that were independent of the will of the managers. For a proper analysis of the situation, there was a necessity to reveal the entire idea of the insolvency. Bankruptcy is a declaration of the court that a debtor is unable to satisfy the claims of the creditor about the monetary obligation as well as the failure to settle the payments that are required. There is three subdivision of the financial inability. First, the unexpected insolvency that reflects on the situations when the administration of the organization confirms that there was no anticipation of the fiscal constraint. Secondly, false bankruptcy which occurs when the owner of the company has the objective of hiding their assets with the aim of avoiding the payments of debts owed to creditors. However such people may be apprehended due to criminal liability if there is proof of the situation. Incautious bankruptcy is the third and final type. It is as a result of the unsustainable as well as inefficient activities of the managers of the company. Bankruptcy can be predicted since it does not occur instantaneously. More so the process that involves the dismissal of thousand of employees must undergo analysis for the compliance with the present regulation (Caprotti, 2016).

When the financial situation of Solyndra was proclaimed to the authorities, the actions of the Board of Directors, as well as the CEO of the company, are placed under close scrutinization by the US Department of Justice. It was a necessity to dig out the exact cause of the trouble. The need to determine who is to be held responsible for the financial health of the organization. More so, to find exactly whether the activities of the executives entails a malpractice. The detailed classification of the circumstances of the case was initiated by the committee of the Republican faction of the House. There were various legal issues raised. The most interesting matter was that the executive of Solyndras refused to discuss their client's contracts as well as the procedure of involving agents to take control of the failure of the corporation (Caprotti, 2016).

Also, it was noticeable that the managers received private investors money with the intention of leading the company to bankruptcy before the taxpayer could cause the firm for violating the Energy Act of 2005. It is significant to note that the Energy Policy Law of 2005 provided most of the funding towards Solyndra which complied with the Title XVII section 1705 that was amended by American Recovery as well as the Reinvestment law. Hence, therefore, the remittance from the government to the organization was legal. Nonetheless, the public community came to learn of the squandering of their money as a result of the actions by Solyndra (Rozell & Epstein, 2015).

In the course of the bankruptcy process, the company violated the labor legislation by laying off thousands of workers. As a result, the staff who were offended went to court and filed a claim while mentioning that the firm actions were illegal. It was a legal obligation of the company to inform its workers in 60 days before sacking by the United States Fair Labour Principles Act. More so they claimed the company did not issue the Workers Adjustment and Retraining Notification (WARN). Therefore the staffs were claiming for the disbursement of their two months pay, health remunerations, 401(K) contributions, and the indemnification of over 1100 workers. Even though the court ruling was partially favoring the workers, the company was bankrupt, and it lacked enough money to settle all the expenses. Besides the costs, their creditors expected to be refunded. In the situation, the court had to establish the lender's priority accurately. The entire process is under strict regulation of the U.S Bankruptcy Code which gives the employees individual right for their claim to be satisfied (Nwosu, 2013).

There was a major scandal after the collapse of Solyndra which was as a result of financial problems as well as some ethical issues. The most notable point was that George Kaiser who was the biggest shareholder at Solyndra had participated in the financing of the presidential campaign belonging to Obama. Many believe that it is as a result of this fact that the company could easily get massive loans without following the appropriate due diligence and in a short period. It was challenging to account for the primary objective of obtaining the loans. However, various facts that show that there existed some interest from the political side. Not discussing occurrences that were not known but anyone was the most rational thing to do. However one could not resist from mentioning the accusation of the Energy Department for forcing Solyndra executives from dismissing the workers prior to the primaries of 2010. Also, the administrative department had the knowledge of the financial constraint of the organization but hid it. It is a proof that there were certain moral concerns (Mayer et al., 2014).

Before permitting any alteration from the loans, the Division of Energy is expected to seek advice from the Management and Budget Office as well as the Secretary of the Treasury as is stated in the US Energy Policy Law. Therefore in the case of Solyndra, the financial institution of the government did not follow the regulations and failed to act by the procedures of providing financial help. Consequently, the loan repayment of the government was at risk since there was no evaluation of Solyndra_x0092_s financial perspective as well as the assets. Originally, the organization was unable to acquit the expectations which mean that the transfer of such an enormous amount of money could not be possible. More so by initiating the bankruptcy process, the company evaded the levies, and the saved money was not put in use to restructure the business. Also, the executives had no intention of defending the organization together with its integrity. By doing so, the company breached the American tax requirements which are found in the US Tax Code (Nwosu, 2013).

The failure of the corporation to notify the Division of Energy appertaining its monetary inability meant that it broke the US Code of Ethics. Also, the contribution of George Kaiser towards Obama's presidential campaign was an equivalent of 75 million dollars. It is therefore evident that his contribution had an indirect impact on the funding activities of the company. By the time the community gained the knowledge of the collapse of the enterprise, thousands of laborers had been dismissed without the proper warning. It was an unswerving fissure of the provision of the laws of labor (Chan, 2015).

The ethical outline of the case is associated with the misuse of authority by the department of energy officials. The officials were restricted from authorizing the finance start-up of the corporation majorly due to their activities that were in connection with the production of technologies that were pollution free. The granting of the huge amount of loans from the government requires meticulous scrutinization of the organization's financial capacities as well as their activities. In all case, proper due diligence was to be conducted. More so, the department of energy did not seek the approval of government institutions. Therefore there is an additional background of the case as suggested by the unjustified granting of the loans even before testing the organization and all the breaches (DiLeo, 2014).

In the 20TH century there existed a well-known economist by the name Milton Friedman. He was supporting the concept of the free market which was independent of the assistance of the government. His argument was that the state administration should liberate all business entities by reducing the influence on the market. The economist thought that it could bring the prosperity of the economy. As a result of the liberation, the organizations would be able to create fair competition in the market. Even though the thought can undergo criticization Friedman_x0092_s approach is applicable in Solyndra_x0092_s situation. The idea of the unregulated market process the inconvenience of financial startups such as Solyndra. While considering Friedman_x0092_s concept in Solyndra_x0092_s case, there would be no loss of taxpayers money since the company would be independent of the government and therefore it could conduct a struggle for clients in the market independently without any support. Consequently, the state administration would not be held accountable for the organization mismanagement of funds (Hasnas, 2016).

The court_x0092_s defendants managed to prove that the executive of the corporation did not have the objective of evading the tax liability. Following the win, the company managed to escape criminal responsibility. However, the officials tempered with the court proceedings concerning the repatriation of the money that was granted by the administration of the state. Despite the win, the organizations of labor filed a case against the managers for breaching the labor regulations by dismissing workers without notification, and they demanded full amount be compensated. Internal investigation on the matter concerned with unjustified granting of loans was initiated by the House of Committee as well as the office of the Prosecutor. All these actions materially affected the executives of the company. It was the ruling of the court that all of the top managers return some of the money with a total sum of 370 thousand dollars per manager. Finally, it was an agreement of most of the senior executives as well as the shareholders that the government should not interfere in any way the enlargement of start-ups in the Silicon Valley (Mayer et al., 2014).

After analysis of the case, it is evident that early action of the government may cause negative results. The taxpayer's money was misused as a result of ethical, economic and political issues. However, it is proper to consider that the Solyndra was very promising since it had unique technologies as well as innovations. The solar panel that they were developing would have moved a step closer towards the creation of manufacturing that is pollution free. It was because of this foreseen benefit that stimulated the funding of the company. In addition to economic as well as ecological reasons, there were other ethical issues. After funding the Democratic presidential candidate, the white house swayed the verdict of granting monetary support to the organization. Due to the influence from the white house, the Department of Energy was unable to conduct the recommended evaluation of the company and neglected the approval of other financial institutions. The issue led to the use of taxpayers money to fund the organization. The entire process of bankruptcy together with the breaches influenced the government's reputation negatively.


Caprotti, F (2016). Protecting innovative niches in the green economy: investigating the rise and fall of Solyndra. GeoJournal, 1-19.

Chan, G. (2015). Course Syllabus for PA 5711 Science, Technology & Environmental Policy Fall.

DiLeo, D. R (2014). Faithful Citizenship in the Age of Climate Change: Why US Catholics Should Advocate for a National Carbon Tax. Journal of Catholic Social Thought, 11(2), 431-464.

Hasnas, J (2016). Some Noodging About Nudging: Four Questions About Libertarian Paternalism. Geo. JL & Pub. Policy, 14, 645.

Mayer, D., Cava, A., & Baird, C (2014). Crime and punishment (or the lack thereof) for financial fraud in the subprime mortgage meltdown: reasons and remedies for legal and ethical lapses. American Business Law Journal, 51(3), 515-597.

Nwosu, C. E. (2013). Perceptions of the impact of United States federal government policies on solar energy technology adoption (Doctoral dissertation, Capella University).

Rozell, M. J., & Epstein, D. Z. (2015). The Law: White House Equities: The New Executive Privilege. Presidential Studies Quarterly, 45(2), 382-395.

November 09, 2022

Environment World

Number of pages


Number of words




Writer #



Expertise California
Verified writer

Working on a team project on global warming, I contacted PeterB. He is an excellent writer who will not only provide you with great sources but also fix all your grammar mistakes if you have a draft.

Hire Writer

This sample could have been used by your fellow student... Get your own unique essay on any topic and submit it by the deadline.

Eliminate the stress of Research and Writing!

Hire one of our experts to create a completely original paper even in 3 hours!

Hire a Pro