By San Francisco Business Times

Federal lawmakers today questioned and defended whether the Department of Energy legally had the right to agree to a debt restructuring of bankrupt solar company Solyndra that made $69 million in private debt invested in the company senior to the $528 million the federal government loaned to the company.

Multiple press reports cited Rep. Cliff Stearns (R-Fl.), who in an opening statement at Friday's hearing as saying: "It is clear that senior officials at the Department of Treasury were not sufficiently consulted about the restructuring and when they offered their opinions and warning signs, they were ignored like so many of the others along the way."

Fremont-based Solyndra, a maker of innovative cylindrical-shaped solar panels, filed for bankruptcy Sept. 6., having announced its intention to do so and laying off nearly all of its workers Aug. 31.

The company had raised about a billion in private investment and had secured a $535 million loan guarantee and low-interest loan from the Department of Energy. The company burned through $527.8 million of that loan before declaring bankruptcy. But earlier in the year, it had raised an additional $75 million (of which $69 million was spent) from Argonaut Private Equity and Madrone Capital Partners to keep the fledgling company afloat. As a condition of that investment, the Department of Energy agreed to allow Solyndra to restructure a portion of its debt. That means when Solyndra declared bankrtuptcy, Madrone and Argonaut would get paid back their $69 million before the US government would get back its $527.8 million.

You can read full coverage of today's hearing at the San Jose Mercury News here.

Copyright 2011 American City Business Journals

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