A123.automotiveIT

A123 makes lithium-ion batteries for passenger cars as well as other battery storage devices (Photo: A123)

A123 Systems said it has filed for bankruptcy protection and will sell most of its operations to automotive supplier Johnson Controls.

The US battery systems maker said it had filed for Chapter 11 bankruptcy protection, which it said will allow "an orderly sale" of its automotive business assets to JCI. Those assets include all automotive technology, products and customer contracts, facilities in Livonia and Romulus, Michigan, cathode powder manufacturing facilities in China, and an equity interest in Shanghai Advanced Traction Battery Systems Co.

The asset purchase agreement also includes provisions through which JCI intends to license back to A123 technology for its grid, commercial and government businesses, A123 said.

The company is still in discussions to find new owners for its grid, commercial, government and other operations. A123 said it had  received "several indications of interest" for these businesses.

JCI is providing 72.5 million dlrs in financing to A123 so the company can continue operations during the sales process.

In August, A123 announced a non-binding memorandum of understanding with Wanxiang. The agreement called for the Chinese components manufacturer  to provide a capital injection to the embattled US battery maker. David Vieau, A123's CEO said at the time that the agreement would help remove the uncertainty about his company's financial situation.

A123 in 2009 received 249 million dlrs from the US government as part of Washington’s strategy to promote green industries, but the financial help failed to restore the company's operations to profitable growth.