a123 systems logoA123 Systems, Inc. (PINK:AONEQ)’s bankruptcy filing was not just a financial or business concern. It also became a political issue when the company sought bankruptcy protection during the height of the 2012 Presidential elections, where incumbent President Barack Obama was seeking reelection. A123 System’s bankruptcy was another issue hurled by Republicans against Obama, noting that the company received around $250 million as grants from the government three years earlier in the hopes of bringing in more jobs to the U.S economy.

Founded in 2001 by an entrepreneur and a scientist from the Massachusetts Institute of Technology (MIT), A123 Systems sought to revolutionize the automotive industry and automobiles’ consumption of energy. The battery maker had deals with General Motors Company (NYSE:GM) before the automaker filed its own bankruptcy, but those deals turned sour when GM chose South Korean LG Chem Ltd (KRX:051910) (KRX:051915) to produce the battery cells for a line of its hybrid cars. A123 Systems, Inc. (PINK:AONEQ) applied for $1.84 billion in federal loans to build plants in the U.S. for rechargeable hybrids and electric cars. The financial aid and brilliant ideas, however, were unable to save the company from falling into bankruptcy. The battery maker made missteps in manufacturing, prompting its major customer, Frisker Automotive Inc., to recall hundreds of cars. When the battery maker filed for bankruptcy in October last year, it said it had 1,763 employees at 10 facilities in the U.S., China and Germany.

In an industry that has been slow to progress, A123 Systems, Inc. (PINK:AONEQ)’s bankruptcy is not the end of the line for the company. The company has churned out remarkable products and its lithium-ion phosphate chemistry is still regarded by the auto industry as one of the best. In bankruptcy, A123 Systems has just obtained approval to sell its automotive business to the American unit of Wanxiang Group, the largest Chinese automotive components manufacturer. The assets were initially to be bought by Milwaukee-based, Johnson Controls, Inc. (NYSE:JCI), but the U.S. company withdrew its bid when it failed to match Wanxiang’s higher offer.

The sale of A123 System’s automotive business for $256.6 million to Wanxiang sparked hope in investors. Since the company filed for bankruptcy, more than 40 claims valued at more than $800,000 have traded. A123 Systems said, in its schedule of assets and liabilities filed with the bankruptcy court overseeing its Chapter 11 case, that it had creditors holding more than $29.4 million in secured claims and creditors holding more than $188.6 million in unsecured creditors.

A123 Systems, Inc. (PINK:AONEQ) completed its initial public offering of 32,407,576 million shares of common stock in September 2009, under the ticker symbol “AONE.”  The company sold an additional 18 million shares of its common stock in April 2011, with the issuance of the 3.75% Convertible Subordinated Notes. A123’s largest shareholder is Heights Capital Management Inc., with 12.5 million shares, or a 7.3 percent stake, followed by Tokyo-based IHI Corp., with 8.45 million shares, or about 5 percent, and General Electric Company (NYSE:GE), with 7.37 million shares, or about 4.3 percent. This month, NASDAQ delisted the common stock of A123, the trading of which had been suspended since November.