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Legal Issues with Solyndra

Buy custom Legal Issues with Solyndra essay

Solyndra was a leading manufacturer of cylindrical panels in California. Despite touting of the company due to its plummeting silicon prices and unusual technology, the company became unable to compete with the ten conventional solar panels. As a result, on September 1, 2012 the company was  bankrupt and ceased operation (Eagle, 2012). When it became bankrupt employees were laid off abruptly, and such employees have gone to court to take action against such a move by the company. The main objective of the paper is to analyze Solyndra manufacturing company reason for being bankrupt. In addition, it is essential to outline the legal and ethical issues surrounding the company while quoting laws to apply in every situation. It will also be necessary to analyze the employees, employed by the company while starting with the executives. This will enable us to understand the reason that drove the company towards bankruptcy. It will be essential to analyze the overall literature review, methodology, and results and discussion of the company. Finally, recommendations and conclusion concerning actions that the company could take will be necessary to mention.

Literature review

Solyndra majored in designing, manufacturing and even selling of photovoltaic solar consisting of panels and at the same time mounting large low scope hardware commercial roofs. For the panel to function effectively, it was necessary to place it horizontally while packaged together. This made the company claim that their panels covered significant space and thus able to produce more energy on an annual basis per rooftop. This boosted the company and each time people could state that it was not the same as those produced by other companies. The panels were a result of cylindrical racks tubes opposed to the usual flat panels. Since their panels where cylindrical, the designers thought that they were able to capture light from all directions. Each of the Solyndra cylinders had a one-inch diameter that consisted of two tubes. The company was able to use equipment made for depositing CIGS outside the inner tube. This includes not more than 200 CIGS cells. At the top of the material, an optical agent of coupling was added. This aimed at concentrating the sunlight that came via the outer tube.

Once the inner tube was inserted, via the outer tube, each of the cylinders was sealed using metal and glass to exclude moisture. Advantage that the company claimed was that it was not necessary to move the panels to track Sun. They claimed that since the panels were cylindrical, they always had some of its face directly facing the Sun. Solynidra panel manufacturing company always claimed that, unlike the other panels, there’s always produced more energy per day. The nature of the panels enabled them to allow wind to blow. As a result, such factors enabled PV installation on a broader range without cases of ballasts that are always problematic. Solyndra also claimed that cases of snow and wind where negligible because there panels were lighter in weight. The company also stated that their panels were able to convert up to 12 to 14 percent of the light from the sun into electricity that made it efficient compared to its competitor. In addition, the fact that the panel was laid flat on the rooftops made it more efficient. However, an issue that was of considerable concern over years was the company’s inability to post any figures of performance. In 2006, the company started to have demonstration systems globally.

During the period, the company was under the leadership of Brian Harrison, who was an Intel Corporation veteran. His reins began on 27 July 2010 when Chris Gronet the founder was under replacement. The main investors included U.S. Venture Partners, Masdar and Artis Capital Management, George Kaiser Family Foundation, Redpoint Ventures, CMEA Ventures, Virgin Green Fund, RockPort Capital Partners, Madrone Capital Partners, and Argonaut Private Equity. The company in 2009 was able to post $100 million as revenue. This enabled the public to estimate that it was able to produce a high level sales. This growth was able to lead to a market cap that ranged between $1.76 - 2 billion. Recording profits, the revenues in 2010 amounted to $140 million. Indeed the company was actually performing well as far as revenue was a concern. Some of the other top executives of the company included Bill Stover, CFO;  Corby Whitaker, VP, Sales United States; Karen Alter, SVP of Marketing; Ben Bierman, EVP Operations and Engineering; and John Gaffney, Corporate Counsel (Coons, 2011).

As far as funding was a concern, Solyndra borrowed a loan of $535 million from the U.S. Energy Department. According to the company’s restructuring plan, the government was to recoup 19 percent on the total $142.8 million on the loan, and the rest $385 million was to remain. In addition, Solyndra received a tax break of $25.1 million from Advanced Transportation Financing Authority and California's Alternative Energy. It is worth nothing that most of the funding for the company was earned based on title 17 sections 1705 under the Energy Policy Act of 2005. When the company became bankrupt, the president Obama’s chief strategist in February 2012 gave a response concerning the department of energy. He stated that because most of the people were laid off, Obama’s administration was not ready to back off and that new jobs were going to be created. On the other hand, during the campaign period, republican aspirant Mitt Romney visited the factory at some point in time. He laid a lot of criticism on the then president and his support. Most of the company’s manufacturing activities were done in the second fabrication plant. In March 20 2009, a new plant that had been constructed was opened and was expected to employ up to 3000 people. This meant that 1000 new jobs were going to be created, and hundreds of Americans could be employed. However, people’s expectations were not put in place because; the company instead stated that, in November 3 2010, it was going to lay off 40 people and up to 150 temporary employees would have their contracts not renewed. In August 31 2011, Solyndra announced that it was necessary to fill in for bankruptcy protection Chapter 11. This necessitated the company to lay off up to 1,100 employees, accompanied by shutting down its operations and manufacturing activities. When an employee quarterly meeting was held, they were informed that the company was in the process of losing a lot of money despite the fact that the production coast was declining. The idea of lying off employees would paralyze operation and this came about in a board meeting that as held on August 30. This idea was because new capital injection to the company was subject to rejection. Investigations commenced to determine if actually the company was bankrupt.

Methodology

In every research, one can use either primary or secondary sources of information. Primary sources are those obtained first hand from the field while secondary sources are those stored in materials such as books, articles, journals, magazines, newspapers and electronic database among others. Primary sources of information include the use of sources such as interviews, questionnaires, and observations. Interviews involve one on one discussion between a researcher and a respondent or sample population. Questionnaires involve a set of questions for a respondent to fill concerning an issue under research. Observation involves a researcher visiting the place under research and observes actions of intended persons then write a conclusion of occurrences. In this paper, information will be from the use of secondary sources that include books, electronic database, journals, and articles. These are information that obtained by early researchers and stored.

Data analysis and results

During the great depression in the 1930s, there was a high level of unemployment. As a result, attempts were instituted to put forth several companies over time to curb cases of unemployment. Solyndra solar panel manufacturing company commenced operations to offer employment opportunities to some of the US residents. However, the company commenced operations well, but over time, prevailing conditions were unfavorable for its continued operations. As a result, the company became bankrupt and closed. It is from the clause of the company that employees commenced a law case to sue the company for laying them off without giving a notice. The employees disputed the management action. Initially, the company lied off 40 employees and had contracts of up to 150 employees. Therefore, the first lot of employees was commenced a law case to dispute the criteria that was used to lay them off. Employees believed that it was un-constitutional to lay off workers without giving a notice.

On the other hand, the law held that a law had been narrowly set to regulate activities capable of restricting company operations. The decision by the company based on the commercial clause that affects labor were subject to reverse. This enabled employees to  engage in  bargaining to facilitate industrial peace. Therefore, the government got the authority to penalize corporations that did not engage employees in discussing. Section 4 Cap 6 Part 2 of the federal law states that the congress and the court have a right to imprison or select companies that do not give a notice to its employees prior their laying off (Hans, 2012). Therefore, as the employees went to court, they were sure that they had every right to be informed even tough it was necessary to lay them off. In addition, title 2 of the act also prohibited discrimination of employees. This motivated them to demand  an explanation on how the first group was diminished form work. According to part 5 article 1 section 8 of the state law, it states that congress has the power to lay, and collect taxes for payment of taxes if the state is in debt. Therefore, the employees were arguing that, although, the company was bankrupt, then how was it able to pay taxes to the state. Indeed, it was not ethical for the company to lay off its employees without giving a notice.

Conclusion and recommendation

The top executives of Solyndra had refused to talk to the U.S. officials concerning the possibility that they received executive bonuses after the company’s profits began to decline. Even to date, the executives have frustrated the proceedings of bankruptcy through their refusal to provide clear insight concerning the company’s dramatic and sudden shutdown. Some of the officials that have demonstrated unethical behavior include the CEO Brian Harrison and its Chief Financial Officer Bill Stover. Attorney of U.S. told the officials that he would not identify customers of the company as this could be the subject for investigation and commencement of litigation. Some of the questions relied to the officials include the possibility of the company to repay loan borrowed from the government (Chronicle, 2012). Refusal by Solyndra officials to cooperate on the proceedings concerning bankruptcy happened  days after their decline to respond to the congress question of invoking the Fifth Amendment regarding amendment rights for self-incrimination. The most annoying thing is the fact that none of the federal lawyers has attempted to recover the money. Therefore, the attorney of the government has call upon the judge of the bankruptcy court to invite an independent trustee to handle the case. The fact that the management decided to invoke the Fifth Amendment does not guarantee them a reason to evade disclosure and necessary reporting of their bankruptcy status.

Most of the people in the US have questioned the accuracy of the company. This is because the federal investigations are getting concern that the company must have lied to the energy department  to secure more funding. The latest investigations indicate that the executives declined responding as to whether information issued to creditors, investors and other interested parties were accurate. The executives also refused to mention the period they determined that the company was suffering a financial crisis. To be able to continue with court proceedings, the executives should be willing and able to disclose all the necessary information for court filling. Early last month, Solyndra spokesperson was called and emails written to him to communicate their commitment to offer information needed by the court. Instead, he responded that they were not aware that the company’s directors and executives wrong doing. Finally, it is worth noting that the company’s executives since the closure of the company have not been cooperative concerning investigation. They have been unwilling to disclose information, and the greatest question is the impact that such behavior will have on creditors attempting to recover the money. It is essential to employ an independent court to handle the case so that the creditors who need their money returned and employees dismissed without notice are able to get justice.

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