Obama administration restructured Solyndra's loan even though it was in technical default

The WSJ article here makes it sound as if the government might have an out here because Solyndra violated the terms of its agreement over the loan. The big problem is that the government apparently knew this and restructured the loan to keep Solyndra going even after it was in in technical default. Even worse, the restructuring the loan made it so that the government took a riskier position in the loan that it gave out. From the WSJ:

The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.

The Energy Department ultimately restructured the loan agreement to help keep the company afloat and Solyndra continued to draw money from its loan.

Solyndra's cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.

The company's financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

The default is the latest indication of the serious financial troubles afflicting California-based Solyndra, which filed for bankruptcy protection earlier this month. It will likely add to questions surrounding the Obama administration's backing for the company even as its financial problems mounted. . . .

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