On July 12, 2012, Valence Technology, Inc., a developer and manufacturer of advanced energy storage solutions that is headquartered in Austin, filed for chapter 11 bankruptcy in the Western District of Texas. It has been assigned Case No. 12-11580.
Valence is a global leader in the development of patented lithium iron magnesium phosphate advanced energy storage systems, and it has redefined lithium battery technology and performance by marketing the industry’s first safe, reliable and rechargeable lithium iron magnesium phosphate batter for diverse applications. Valence utilizes numerous benefits from its proprietary energy storage technology and worldwide intellectual property portfolio. As of March 31, 2012, Valence held 133 U.S. patents and 158 patents in foreign countries, and had 174 patents pending in the U.S. and foreign countries.
As of March 31, 2012, Valence reported approximately $32 million in total assets and approximately $83 million in total liabilities. Revenue totaled approximately $44 million for fiscal year 2012.
Valence’s business focuses on four key market sectors.
- The Motive market: where Valence is enabling efficient transportation solutions from all-electronic and hybrid personal transporters to commercial fleet delivery vehicles and mass transit buses.
- The Back-Up Power market: where Valence offers back-up power applications that are well-suited to replace lead acid solutions.
- The Industrial/Medical market: which includes applications where the majority of the battery’s energy is used in cleaning and lifting, powering, or handling goods or materials, rather than propelling the application, such as floor cleaners, forklifts, medical carts, defibrillators, wheelchairs, robotics and other industrial tools.
- The Marine market: which includes applications such as hybrid yachts, ocean-going tug boats and other private and commercial vessels.
Events Leading to Bankruptcy
While Valence has expanded its customer base and increased its revenues over-all during the past 3 years, it experienced operating losses in the current and prior fiscal years. In addition, a third-party loan, in the amount of approximately $3 million in principal and interest, matures on July 31, 2012, and as of the filing date, Valence’s cash and cash equivalents were insufficient to fund its operating and capital needs.
Valence also projects that revenue for fiscal year 2013, which commenced April 1st of this year, would be insufficient to cover its operating expenses.
According to the President of Valance, Robert Kanode, Valence has historically relied upon management’s ability to periodically arrange for additional equity or debt financing to meet its liquidity requirements. To meet its current liquidity requirements, Valence needed, but had not obtained prior to filing, such additional financing, however.
According to Mr. Kanode, “”[t]o minimize any loss of value to its business, [Valence’s] immediate objective is to engage in business as usual following the commencement of their bankruptcy case with as little interruption to the Debtor’s operations as possible.” Bankruptcy certainly provides companies with temporary relief from creditors while they develop a plan to reorganize. Valance appears to be well-suited to advantage of this opportunity.
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- Valence Technology: Battery Maker Files Chapter 11 (forbes.com)