Stimulus-Backed Car Charging Company Close to Bankruptcy

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Stimulus-Backed Car Charging Company Close to Bankruptcy

by Joel R. Glucksman on August 29, 2013

ECOtality Inc., a U.S. Energy Department-backed maker of electric car charging systems, is teetering on the brink of bankruptcy as a result of heavy debt and sustained operating losses.

The company was previously awarded nearly $100 million in grant funding under the 2009 stimulus law, but the Energy Department has since suspended stimulus payments due to the firm's financial difficulties. ECOtality noted that it has been facing significant cash flow problems as it seeks to increase sales, establish new products, raise more capital, and resolve an overheating issue with certain charging equipment already on the market.

The firm has faced allegations of insider trading, and its latest filing with the Securities and Exchange Commission revealed that it has also been under investigation by the Department of Labor for alleged violations of the Fair Labor Standards Act and the Davis-Bacon Act, according to the Washington Free Beacon. The investigation - which resulted in a settlement of $855,000 to be paid to certain employees and independent contractors - has been a large contributing factor to the company's financial struggles, according to the SEC filing.

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Published In: Bankruptcy Updates, Finance & Banking Updates, Mergers & Acquisitions Updates, Securities Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Joel Glucksman, Scarinci Hollenbeck | Attorney Advertising

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