According to Bloomberg, yesterday’s ruling by a judge overseeing the Solyndra bankruptcy could provide $341 million in tax breaks to two venture capital firms, including Madrone Capital, which acts as an investment arm for the Walton family.
The U.S. government had opposed Solyndra’s bankruptcy plan, arguing that it was improperly designed to provide tax breaks to these private investors, at the expense of smaller creditors and the federal government, which had provided the company with more than $500 million in loan guarantees and subsidies.
When the Fremont, CA-based solar cell company Solyndra declared bankruptcy last September, conservatives attacked the Obama Administration.
But conservative critics have largely ignored the fact that one of Solyndra’s major investors is the Walton-connected Madrone Capital.
Yes, the same Waltons who together own about half of Walmart and have a combined wealth greater than the bottom 42% of the American population. Madrone Capital is run by Walmart Director Greg Penner, a former Walmart executive who is married to Carrie Walton, daughter of Walmart Chairman Rob Walton.
And now it appears that Madrone and the Waltons are going to get bailed out of the Solyndra bankruptcy, while letting the government and other creditors take a big hit.
Hospitality union UNITE HERE explains here that the bankruptcy plan gives Madrone Capital and Argonaut Ventures tax credits worth more than $300 million in exchange for those firms accepting up to $10.2 million in losses.
The plan, if passed, will heavily benefit Madrone and other major investors at the expense of Solyndra’s smaller creditors and the federal government, which will likely recoup only 3 cents and less than 19 cents on the dollar, respectively.
And, as UNITE HERE makes clear, this is not the way bankruptcies usually work.
Normally when a company goes bankrupt, the investors take the biggest hit, while the firm’s creditors (lenders and companies to whom the company owes money) get first crack at the remaining assets. That’s only fair, because the investors are risking their capital for the chance to profit handsomely if the company does well.
Welcome to Walton World – where rule #1 is: “The Waltons always win” and rule #2 is, “If the Waltons lose, see rule #1.”