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Wal-Mart Hires Former Bush Aide as Chief Image Maker

The company, the nation’s largest retailer, announced on Wednesday that Dan Bartlett, an adviser to President George W. Bush, would be its new executive vice president of corporate affairs, starting in late June.

The vague-sounding role in fact has a wide mandate, overseeing corporate communications, government relations, sustainability and the Wal-Mart Foundation. It is in essence Wal-Mart’s chief image maker.

Mr. Bartlett replaces Leslie Dach, who announced his resignation in March. Mr. Dach, an ex-Clinton aide, helped create Wal-Mart’s sustainability push, its $4 generic drug program and its healthy food program after years in which Wal-Mart had been battered by politicians and the media. “What’s happened over the last several years, clearly here in the United States and around the world, it’s become easier to site a Walmart and we have become more accepted by the community,” Mr. Dach said last year, describing the effects of those programs on Wal-Mart’s business.

Under President Bush, Mr. Bartlett oversaw the White House press office and was an adviser on his campaigns for governor and president. More recently, Mr. Bartlett was chief executive of the United States division of Hill&Knowlton Strategies, a communications firm.

Nicolle Wallace, a Republican strategist who was White House communications director under Mr. Bartlett, described him as “low-key, very unflappable, he’s the ultimate team player.”

“He was just really excited about being part of a company that, while it has an image and an identity as just a giant corporate leader, it’s also very important in all the communities in which it exists,” she said. At the White House, “he operated at that intersection of public policy and communication and really confidential counsel to the executives.”

While his work in the White House, obviously, focused on a Republican agenda, “in the private sector he’s given advice to people of all political persuasions,” she said.

Today, Wal-Mart is facing several reputational issues. It was linked to garments produced at the building in Bangladesh that collapsed last month, killing more than 1,100 workers. Wal-Mart has declined to join other large retailers like H&M in a pact to improve safety standards in Bangladesh, instead saying it would pursue its own safety program.

Wal-Mart is being investigated by the Securities and Exchange Commission and the Justice Department on potential violations of the Foreign Corrupt Practices Act, and is also conducting an internal inquiry and compliance review. The New York Times reported last year that executives at the company’s Mexican subsidiary had bribed officials to smooth expansion, and that executives at the company’s headquarters had known about the bribes and declined to take action. In the most recent quarter, Wal-Mart spent $73 million on costs related to those reviews, much higher than the $40 million to $45 million it had expected to spend.

And Wal-Mart has faced issues in its stores, including slower-than-expected sales, problems in keeping shelves stocked and complaints from unions about how it treats workers.

China to Investigate Top Economic Policy Maker

The agency, the Central Commission for Discipline Inspection of the Communist Party, which runs corruption inquiries involving senior officials, said Mr. Liu was “suspected of grave violations of discipline, and is now under investigation by the organization,” according to a report from Xinhua, the state news agency.

The report came more than five months after the journalist, Luo Changping, boldly challenged Mr. Liu and investigators by publicly accusing Mr. Liu of shady business deals and other wrongdoing like threatening to kill his mistress and overstating his academic qualifications. Mr. Luo laid out the charges on the Internet in early December. They lingered there, despite a denial by a spokesman for Mr. Liu and the power of censors to erase the postings, which fanned a public uproar.

Yet for months it appeared that Mr. Liu might survive the scandal. Since 2008, he has been a deputy chairman of the National Development and Reform Commission, an agency that oversees many areas of economy policy. Until March, he was also head of the National Energy Administration, and he made several public appearances after Mr. Luo made the accusations, according to Chinese news reports.

The Xinhua report did not detail the official allegations against Mr. Liu. But Mr. Luo, a deputy editor of Caijing Magazine in Beijing, said he was sure they were related to his accusations.

“I know there’s a direct connection, but I can’t say any more,” Mr. Luo said in a telephone interview.

“I had felt panicky before because nothing was happening, but I’ve breathed a sigh of relief now that this has happened,” he said, referring to the inquiry.

Mr. Liu, 58, could become a trophy in the effort by China’s new leader, Xi Jinping, to persuade disenchanted citizens that he is serious about ending abuses by officials. Since becoming party chief in November, Mr. Xi has vowed to clamp down on corruption, extravagance and self-enrichment; he has said both “flies” and “tigers” — junior and senior officials — would come under scrutiny.

Other officials under investigation for corruption and other crimes include Bo Xilai, a former Politburo member whose wife, Gu Kailai, was convicted and in August given a death sentence, which was then suspended, on charges of murdering a British businessman. In April, the former railway minister, Liu Zhijun, was charged with corruption and abuse of power.

The Central Commission for Discipline Inspection wields broad powers to detain officials and pursue secretive inquiries. In serious cases, the commission can hand officials over to the police and prosecutors to be investigated on criminal charges, which almost always end in convictions and sentences by party-run courts.

Despite Mr. Luo’s apparent vindication, Chinese leaders are wary of letting the public seize the initiative in fighting corruption. “What I really hope to see is more change at the institutional level to fight corruption, not just focusing on individual cases,” Mr. Luo said.

DealBook: Bondholders and Mexico Glass Maker Reach Deal

Steve Marcus/ReutersPaul Singer, chief of the hedge fund Elliott Management.

MEXICO CITY — The giant Monterrey glassmaker Vitro said Monday that it had reached an agreement with bondholders, ending a dispute among powerful financiers that had ricocheted between Mexican and American courts.

Under the agreement, Fintech, which is owned by the Monterrey-born investor David Martinez, will buy the bonds held by a group of hedge funds and pay additional cash to cover legal fees. In return, Fintech will receive a 13 percent stake in a Vitro subsidiary and a $235 million note issued by the subsidiary.

Bondholders will receive 85.25 cents on the dollar for their bonds, according to the agreement. The company said that Fintech would buy a “substantial majority” of the $729 million in bonds that are in dispute.

The legal fight had produced ripple effects in the emerging debt markets. For example, Cemex, one of the world’s largest building materials companies, was forced to sign a “Vitro clause” when it issued debt last year. Cemex, with a reputation for strong corporate governance and a company that is also based in Monterrey, Mexico’s industrial heartland, promised debtors that it would not grant subsidiaries or related-party creditors the same rights as bondholders.

“Ever since Vitro came out with this cockamamie scheme,” there has been uncertainty about bankruptcy proceedings in Mexico, said Arturo C. Porzecanski, economist in residence at American University’s School of International Service.

The Vitro bondholders had been fighting the company in United States courts, arguing that Vitro borrowed money from its subsidiaries, turning them into new creditors who then outvoted bondholders on a plan to restructure $1.2 billion in defaulted debt.

A Monterrey court approved the plan in February 2012, where bondholders who agreed to the new financial plan received almost 69 cents on the dollar for their debt, according to James V. Harper, the head of research at BCP Securities in Greenwich, Conn.

But several giant hedge funds, including Elliott Management and Aurelius Capital Management, held out. Elliott Management is run by Paul E. Singer, who has made a career out of extracting payments from debtors that have defaulted.

Instead, the funds asked American courts to reject the Mexican bankruptcy plan, calling it “a testimony to audacity, brazen manipulation and greed.”

Last June, Judge Harlin DeWayne of the Federal Bankruptcy Court in Dallas refused to apply the Mexican bankruptcy plan in the United States. A federal appeals court upheld the judge’s decision in November.

Mr. Harper said those decisions removed any legal bankruptcy protection for Vitro in the United States and forced it to negotiate. “I think they were surprised when they didn’t get it,” he said. “I don’t think they counted on such aggressive opposition.”

Without protection, Vitro might have faced collection efforts on its sales in the United States, which amounted to $446 million last year.

It is rare for an American judge to refuse to enforce another country’s bankruptcy law in the United States, Mr. Harper said. “That was a substantial setback for Vitro and a substantial victory for the holdouts.”

Noting that the Mexican government had filed a brief in support of Vitro, Mr. Porzecanski, the economist, said, “The fact that the workout process was not recognized in the United States leaves Mexico with a black eye.”

Under the agreement announced Monday, Vitro and the bondholders agreed to drop all legal disputes.

“These agreements allow us to close the book on a challenging period for our company, and focus entirely on our business and meeting our customers’ needs,” said Vitro’s chairman, Adrián G. Sada.

It was Fintech’s owner, Mr. Martinez, who helped Vitro put together a plan to revamp its finances. Mr. Martinez remains a mystery, despite being known as a collector of art and owner of one of the most expensive apartments in Manhattan, atop the Time Warner Center.

“Fintech’s participation was crucial in order to establish the foundation for the agreements we have reached,” Claudio Del Valle, Vitro’s chief restructuring officer, said in a statement.

DealBook: A JPMorgan Deal Maker Is Returning to the Law

8:32 a.m. | Updated with memoOne of JPMorgan Chase’s most senior deal makers is heading back to the practice of law.

James C. Woolery, the bank’s co-head of North American mergers and acquisitions, said on Sunday that he was leaving after a two-year stint to become the deputy chairman of Cadwalader, Wickersham & Taft. His departure will leave Chris Ventresca as sole head of the division.

It is the latest turn in the career of Mr. Woolery, who joined JPMorgan in 2011 after 17 years at Cravath, Swaine & Moore, one of the top mergers law firms in the country. In his new role, Mr. Woolery stands as a potential successor to Cadwalader’s current chairman, W. Christopher White.

“I’d spent a lot of time with Chris,” Mr. Woolery said in an interview, “and became convinced that the firm really had a desire to go in a direction I’d wanted to go.”

In his second career as an investment banker, Mr. Woolery worked on some of the biggest deals of the past two years, including AT&T’s attempted takeover of T-Mobile USA and Dell’s $24.4 billion sale to its founder and the investment firm Silver Lake.

Over all, JPMorgan currently leads the industry in announced deals within the United States, with 20 transactions worth $93.5 billion for the year to date, according to Thomson Reuters.

Mr. Woolery’s decision to try his hand at banking marked him as one of a handful of top deal lawyers to do so; Robert Kindler left Cravath as a partner in 2000 to join JPMorgan, and now serves as Morgan Stanley’s head of mergers worldwide.

Other lawyers have also switched back from banking, albeit to their old firms, like Harvey R. Miller, who departed Greenhill & Company to return to Weil, Gotshal & Manges, and James Sprayregen, who left Goldman Sachs to go back to Kirkland & Ellis.

Mr. Woolery’s latest move was not made out of dissatisfaction with JPMorgan, he said. He noted his work with Mr. Ventresca as a high point. “Chris was a wonderful partner,” Mr. Woolery said. “What we were able to do is highlight the M.& A. focus and talent in the firm.”

(People close to JPMorgan said that the departure was on amicable terms. The bank will use Mr. Woolery and Cadwalader as legal advisers on the Dell transaction, for instance.)

Even so, he said that he had still occasionally considered a return to the world of law.

“I didn’t leave the law and think, ‘Well, thank God that’s over,’ ” Mr. Woolery said. “I certainly never ruled it out, but it would have had to be the right opportunity.”

That opening came months ago when Mr. White of Cadwalader approached Mr. Woolery about moving to the firm and its downtown Manhattan offices. The pitch: help push the 221-year-old Cadwalader further into the top ranks of advisers on corporate and regulatory matters.

The firm, one of the oldest counselors to Wall Street, has sought to rebuild over the past four years. Cadwalader laid off scores of lawyers in the wake of the financial crisis after one of its mainstay practices, advising on complex debt offerings, dried up.

Rather than trying to compete with giant law firms that offer a “supermarket” model of dozens of practice areas, the idea is to keep Cadwalader focused on helping clients on mergers, debt offerings, antitrust and a handful of other areas.

Mr. Woolery will also remain an active deal maker, intent on improving his new employer’s reputation for such expertise. His time as a banker, he said, helped him think about all the issues that corporate boards and other clients must consider.

And Cadwalader will be gaining a big-name mergers specialist, a role largely vacated since the 2011 defection of Dennis Block to Greenberg Traurig.

And as for competing against his former colleagues at Cravath, Mr. Woolery wished them well.

“Cravath will be Cravath,” he said, calling it a standard-setter for the industry. “I want nothing but the best for that firm.”

Here’s JPMorgan’s official memorandum about Mr. Woolery’s departure, sent from Jeff Urwin, the firm’s global head of investment banking:

Message from Jeff Urwin

Jim Woolery will be leaving J.P. Morgan to join Cadwalader, Wickersham & Taft LLP as Deputy Chairman of the law firm and Co-Chair of its Corporate department.

During his time at J.P. Morgan, Jim has been a great partner and an outstanding advisor, working on some of the most significant M.&A. transactions announced over the past few years. His experience at J.P. Morgan, combined with his 17 years at Cravath, Swaine & Moore LLP, gives him expertise and insights that will make him a tremendous asset to Cadwalader, and to their clients. Jim will ensure a smooth transition of responsibilities over the coming weeks, and see that his current commitments are completed.

Chris Ventresca will continue as sole head of our top-ranked M.&A. practice in North America.

While Jim is leaving J.P. Morgan, he is joining one of the best law firms in the industry. It is one we work with very closely and we look forward to working with him in the future. We wish Jim all the best in his new role and continued success to Chris.

Maker of Buckyballs Says It Will Stop Selling Them

The maker of the magnetic toys called Buckyballs announced on Monday that it would stop selling them this week because of a legal and public relations dispute with federal regulators.

In a statement, the company, Maxfield & Oberton Holdings, said the decision was caused by a “long-running and costly legal dispute” with the Consumer Product Safety Commission, which said that Buckyballs and similar products made from rare-earth magnets were dangerous because children have been severely injured after swallowing them.

In July, the safety commission took the relatively rare step of filing an administrative complaint against Maxfield & Oberton, demanding that the company stop making the product, warn consumers that Buckyballs are dangerous and offer them a refund. Eleven other manufacturers voluntarily recalled their products and halted production.

“Given the precedent-setting legal case before us and the continued badgering by the C.P.S.C., Buckyballs will go the way of Crystal Pepsi and the DeLorean,” Craig Zucker, the company’s chief executive and founder, said in a statement.

Buckyballs’ Web site has a clock ticking off the seconds until the time sales are shut down on Thursday, an event called the Buckypocalypse.

Buckyballs’ problems are not confined to federal regulators. The estate of the inventor Buckminster Fuller, for whom the toys are named, has filed a lawsuit against the company in California federal court for misappropriating his name.

On Nov. 5, Maxfield & Oberton was dealt a setback when the judge in the case, Lucy H. Koh, denied its motion to dismiss the case. The attorney for Mr. Fuller’s estate could not be reached for comment.

In an interview, Mr. Zucker described the Fuller lawsuit as frivolous but said that it nonetheless was another challenge for his small company. The company had seven employees and 150 sales representatives in the summer; by the end of the week, it will have just one employee, he said.

The decision to stop sales ends what had been a story of entrepreneurial success by two friends from Brooklyn, who came up with the idea of marketing rare-earth magnets as Buckyballs in 2009. The magnets, which come in a variety of sizes, can be linked into a seemingly endless number of shapes and designs; they were an instant hit.

But the safety commission said children were swallowing the powerful magnets, which can attract each other in the intestines and cause blockages or tears. The commission estimated that there were 1,700 instances a year over the last three years in which rare-earth magnets had been swallowed and had prompted an emergency room visit.

Mr. Zucker maintained that Buckyballs had been marketed to adults and that the packaging had been covered with safety warnings. But in deciding to file an administrative complaint, the commission said the warnings simply had not been enough to prevent children from swallowing the magnets.

Scott Wolfson, a spokesman for the safety commission, said the complaint against Maxfield & Oberton continued because the company had not yet agreed to recall its products and refund its customers.

The agency is also pursuing similar claims against two other companies, Zen Magnets of Denver and Star Networks USA of Fairfield, N.J., which sells Magnicube Magnet Balls and Magnet Cubes. Star Networks had agreed to stop selling its products but reversed its decision, Mr. Wolfson said.

Company officials could not be reached for comment.

Shihan Qu, founder of Zen Magnets, said the company was considering selling the magnets individually, rather than in packs of a few dozen, as a possible way to avoid a clampdown by federal regulators.

“Banning magnets is ridiculous,” he said in an e-mail. “Magnets work exactly as they should, and are only dangerous if misused.”

Battery Maker A123 Systems Files for Bankruptcy

The company’s bankruptcy filing was unexpected, since it struck a deal in August to sell a majority stake to a Chinese auto parts manufacturer. That agreement, with the Wanxiang Group, provided an apparent lifeline to the company. But A123, which has received federal grant money, said the Wanxiang deal was never completed, and on Monday, it failed to make a debt payment due on $75 million it had borrowed from Wanxiang.

In announcing its bankruptcy filing, A123 said it had agreed to sell its automotive assets and factories to Johnson Controls, another American battery producer that has benefited from federal assistance, in a deal it valued at $125 million.

A123, based in Waltham, Mass., was once considered one of the most promising grant recipients under the administration’s $2 billion stimulus program for electric car development. The Department of Energy awarded the company a $249 million grant to establish battery manufacturing operations in Michigan, although A123 had received only about $132 million of the grant before its bankruptcy.

The company’s failure may well become a political football in the presidential campaign, in which energy policy has been a leading topic. The Republican nominee, Mitt Romney, has repeatedly criticized President Obama for his heavy spending on green-energy programs, including a $528 million loan to Solyndra, a solar module maker that went bankrupt last year.

“A123’s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work,” said Andrea Saul, Mr. Romney’s press secretary, in a statement on Tuesday.

The Energy Department defended the federal grant to A123 as one of many bipartisan efforts to support American manufacturing of lithium-ion batteries for electric cars. A department official, Dan Leistikow, said in a blog post that the administration had awarded $2 billion in grants to 29 companies involved in the electrification of vehicles, creating thousands of jobs.

A123 has used about $132 million of its grant to date, plus another $6 million given in 2007 by the Bush administration, said Mr. Leistikow, the agency’s director of public affairs. Michigan has also given A123 a $9 million grant, plus various tax breaks.

Mr. Leistikow said the federal money would not be wasted because A123’s two Michigan factories would now be operated by Johnson Controls.

“In an emerging industry, it’s very common to see some firms consolidate with others as the industry grows and matures,” he said.

The department previously gave Johnson Controls, based in Wisconsin, its own $299 million federal grant for an electric-car battery project.

The Solyndra bankruptcy, which became the subject of Congressional hearings, stoked concerns about oversight of government-backed energy programs.

Another battery manufacturer that received federal help, Ener1, went bankrupt in January. It had approval for $118.5 million in grants from the Energy Department but had received only about half of that when it entered bankruptcy.

A123 was a centerpiece of the government’s electric-vehicle program, opening two factories in Michigan and securing contracts to supply batteries to automakers including General Motors and the start-up firm Fisker Automotive.

But its financial stability has been in question for more than a year. The company suffered a major setback when it had to recall defective batteries in Fisker cars. And despite orders from carmakers, A123 could not generate sufficient revenue or profit from the slowly growing market for electric vehicles.

In August, A123 surprised industry experts by agreeing to sell up to 80 percent of the company to the American arm of the Wanxiang Group, China’s largest auto parts manufacturer.

Political opponents of the Wanxiang deal asserted that the Chinese company would get access to technology and products made possible by the support of American taxpayers.

One of the critics, Senator Charles E. Grassley, Republican of Iowa, said the sale of A123’s factories to Johnson Controls was “something positive” because it kept the company’s assets out of Chinese hands.

But Mr. Grassley and Senator John Thune, Republican from South Dakota, criticized the Energy Department, saying it ignored warning signs that A123 was faltering.

“The bankruptcy raises the prospect that the taxpayers will get little or no return on their investment in A123 and will lose millions of dollars,” Mr. Grassley said.

The Energy Department countered that A123’s employees and customers would be absorbed by a larger, stronger competitor in Johnson Controls.

“A123’s manufacturing facilities and technology will continue to be a vital part of America’s advanced battery industry,” said Mr. Leistikow.

Wanxiang, which has its United States headquarters outside Chicago, pledged in August to invest up to $465 million in A123, but the deal fell apart for undisclosed reasons.

“We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion,” said David Vieau, A123’s chief executive, in a statement.

Instead, the company found a new suitor in Johnson Controls, which analysts say is now in position to be the dominant American battery manufacturer.

A123 said filing for Chapter 11 bankruptcy protection would ease the sale of its automotive assets to Johnson Controls. The deal includes Michigan plants in the Detroit suburbs in Livonia and Romulus, as well as A123’s equity interest in battery facilities in China.

Johnson Controls said it would provide $72.5 million in financing for A123’s reorganization in bankruptcy.

“We believe that A123’s automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls’ position as a market leader in this industry,” said Alex Molinaroli, head of the power systems unit of Johnson Controls.

Brian Johnson, an analyst with Barclays Capital, said in a research note that the deal would help Johnson Controls become “the U.S.-based player” in the market for lithium-ion batteries.

A123 has also received “significant interest” for its remaining assets, primarily its electric-grid technology and products for commercial and government entities, said Mr. Vieau, the company’s chief executive

Whether Wanxiang will bid on those assets during bankruptcy is not known. The head of the Chinese firm’s United States operations, Pin Ni, said in an e-mail on Tuesday, “Our interest and commitment has not changed” regarding A123.

Matthew L. Wald reported from Washington.

Green Blog: Obama-Backed Battery Maker Files for Bankruptcy

Stephen McGee for The New York TimesWorkers loaded finished batteries for 2013 all-electric vehicles in June at the A123 Systems plant in Livonia, Mich.

An electric car battery maker that President Obama touted as part of a vanguard of a new American electric car industry has filed for bankruptcy and is selling its major assets, the company announced on Tuesday.

A123 Systems, which produces lithium ion batteries for the electric car maker Fisker and the truck manufacturer Navistar, received a $249 million Department of Energy grant that was financed by Mr. Obama’s stimulus program. The company has been struggling as electric vehicles have failed to gain a foothold in the American domestic car market. Another battery maker that received federal support, Ener1, filed for bankruptcy earlier this year.

The company’s troubles could provide new ammunition for Mitt Romney, the Republican presidential nominee, who has criticized the Obama administration’s green energy grant and loan programs as a distortion of the marketplace and rife with political favoritism.

Mr. Obama called A123’s chief executive, David Vieau, and Jennifer Granholm, then Michigan’s governor, in September 2010 to celebrate the opening of a battery manufacturing plant in Livonia, Mich., that was built partly with federal funds.

“This is about the birth of an entire new industry in America — an industry that’s going to be central to the next generation of cars,” Mr. Obama said. “And I want everybody to understand just a few years ago American businesses could only make two percent of the world’s advanced batteries for hybrids and electric vehicles – just two percent. But because of your extraordinary work, thanks to the Recovery Act, we’re going to get up to forty percent of the world’s capacity. And that means when folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America.”

In a memo issued to reporters on Tuesday, the Energy Department said that the advanced battery market continues to grow in the United States and around the world despite the troubles of some domestic companies.

The memo said that the agency, with support from Republicans and Democrats, has awarded $2 billion in grants to 29 companies to build or retool 45 manufacturing facilities in 20 states to build advanced batteries, engines, drive trains and other key components for electric vehicles.

The department said that more than 30 of these plants are already in operation and that A123’s announcement that it is selling key assets means that it will continue to operate in the battery market. It noted that A123 received a $6 million grant from the Bush Administration as part of its efforts to promote a domestic electric car industry.

Battery Maker A123 Systems Files for Bankruptcy

The filing came after the lithium-ion battery maker's $465 million rescue deal with Chinese auto parts supplier Wanxiang Group collapsed, hobbled by "unanticipated and significant challenges," A123 said on its website.

A123 has agreed to sell its automotive operations, including two factories in Michigan, for $125 million to Johnson Controls Inc, a leading battery supplier and another recipient of federal green subsidies.

The bankruptcy filing comes as President Barack Obama and Republican presidential candidate Mitt Romney prepare for their second debate Tuesday night.

The U.S. Department of Energy allotted about $90 billion for various clean-energy programs through the administration's stimulus package. Of that, at least $813 million went to energy companies that eventually filed for bankruptcy, including A123, Solyndra, Beacon, Abound Solar and EnerDel.

The Solyndra failure has been regularly cited in stump speeches leading up the November 6 U.S. presidential election, including those of Romney, who argues that the government should not be in the business of picking corporate winners and losers.

The administration has countered criticism of its green energy initiative by saying such investments are needed to bolster the U.S. position in the market for fast-moving and competitive technology, such as advanced batteries.

"The riskiest strategy of all is not competing aggressively for the technologies of tomorrow and the jobs that come," Dan Leistikow, DOE director of public affairs, said in a blog post. "In an emerging industry, it's very common to see some firms consolidate with others as the industry grows and matures."

A123 had promised to create 38,000 U.S. jobs, including 5,900 at its own plants, in return for the government funding under the 2009 American Recovery and Reinvestment Act's Electric Drive Vehicle Battery and Component Manufacturing Initiative.

A123 has tapped $132 million of its 2009 grant, the DOE said. Johnson Controls, which supplies lithium-ion batteries to a number of vehicle manufacturers, also received a $299 million grant under the same program.

A123 supplies batteries to Fisker Automotive's Karma hybrid, which accounted for 26 percent of A123 revenue last year, and the Chevrolet Spark EV that will be introduced next year by General Motors Co.

"GM is aware of the situation with battery supplier A123," GM spokeswoman Kim Carpenter said. "We are monitoring the situation, but we expect no delays in the Spark EV program."

Johnson Controls supplies batteries to Ford Motor Co, BMW and Daimler, among others.

A123 DEAL A BOOST TO JCI

The bankruptcy filing comes after roughly 8 months of attempts by A123 to find a buyer or strategic investor. In March 2012, A123 hired Lazard Freres & Co, which contacted 74 potential partners and investors, according to court documents.

Only 24 discussed the process with Lazard, but only Wanxiang offered to invest in A123 as a going concern. However, it became apparent that A123 would not be able to satisfy some of the conditions laid out in the Wanxiang deal before A123 ran out of money to pay for operations, documents show.

Johnson Controls has provided $72.5 million in debtor-in-possession financing to A123. Johnson Controls said its interest in A123 "is consistent with its long-term commitment to being a market leader in the advanced battery industry."

"This process is in its early stages, so the company cannot provide further details at this time," the company said.

In a research note, Morgan Stanley analyst Ravi Shankar said Johnson Controls would be able to wring out cost inefficiencies in A123 and possible bring the company to break-even quickly. The deal is expected to be dilutive in the first year.

"The transaction is about closing JCI's technology gap in advanced batteries," Shankar said, adding that the deal will help Johnson Controls compete for next-generation hybrid programs and cement its position in the market for start-stop batteries.

WINNERS AND LOSERS

In court documents, A123 said it expects it will be able to sell its non-automotive operations and has identified certain bidders. A123 listed total assets of $459.8 million and liabilities of $376 million in its Chapter 11 petition.

In the first presidential debate, Romney attacked Obama's promotion of green technologies, saying the administration, in doling out billions to clean-energy companies, only picked losers.

"I mean, I had a friend who said 'You don't just pick the winners and losers, you pick the losers, all right?'" Romney said. "This is not the kind of policy you want to have if you want to get America energy secure."

The highest-profile recipient of federal funds, Solyndra, will square off in court on Wednesday against the Internal Revenue Service and the Department of Energy as it argues for its bankruptcy plan.

That plan provides $300 million-plus in tax breaks for Solyndra's venture capital backers while potentially leaving the government with zero return on its investment. Every class of creditor supports the plan except the government, which appears to have negotiated the lowest recovery of all the creditors.

The case is In re:A123 Systems Inc, U.S. Bankruptcy Court, District of Delaware, No:12-12859.

(Additional reporting by Tom Hals in Wilmington, Patrick; Rucker in Washington, Tanya Agrawal and A. Ananthalakshmi in Bangalore.; Editing by Don Sebastian and Dan Grebler)

BlackBerry Maker Posts a Loss, but Stock Jumps in After-Hours Trading

Without naming the rivals to the BlackBerry 10 phone, Thorsten Heins, the company’s president and chief executive, acknowledged that Apple’s iPhone 5, new smartphones running Google’s Android operating system and Windows Phones will make life even more of a struggle for RIM before its rollout.

“There’s many new products coming in so the market is going to get tougher, more challenging,” Mr. Heins told analysts in a conference call Thursday, adding that that will most likely force RIM to cut prices further.

After twice delaying the BlackBerry 10, the company has promised to deliver the smartphone sometime next year.

Many analysts had expected nothing but bad financial news for the quarter long before Thursday. “The street is largely giving RIM a pass on this quarter as it readies the important BlackBerry 10 launch,” said Bill Kreher, an analyst at Edward Jones. “The fact of the matter is that the company has really placed all its bets on BlackBerry 10.”

There was no concealing how far RIM’s fortunes had declined. Its net loss for the second fiscal quarter, which ended Sept. 1, was $235 million — better than the $518 million loss in the previous quarter, but a steep fall from the net income of $329 million in the same quarter a year earlier. Shipments of BlackBerrys last quarter were 7.4 million, compared with 10.6 million a year earlier.

The company said revenue in the most recent quarter was $2.9 billion, up from $2.8 billion in the first quarter though down 31 percent from $4.2 billion a year ago. Analysts had expected a far steeper year-on-year drop in revenue of 41 percent and some feared that the company had dipped into its cash holdings. But RIM actually increased its cash thanks to sharp cost-cutting.

As a result, RIM’s stock jumped more than 20 percent in after-hours trading. In the regular session, before its announcement, it closed at $7.14 a share. RIM’s shares have been as high as $24.74 over the last year.

Several analysts said they were now focused on next year. The new smartphones will be based on a new and more sophisticated operating system and are promised for the first calendar quarter of next year.

“I don’t think anything good can come out until they release BB 10, aside from selling the company or something else in the strategic review,” said Peter Misek, an analyst with Jefferies & Company.

But Shaw Wu, an analyst at Sterne Agee, said the dominance of Apple and Android had closed the window of opportunity for RIM’s BlackBerry 10 strategy and turned the company’s last great hope into its biggest problem.

“It’s about survival now, it’s not about BlackBerry 10,” said Mr. Wu, who is based in San Francisco. “That’s almost secondary. The battle now is staying alive and looking after your current customers. It’s not really clear that their core customers are looking for BlackBerry 10.”

Unless BlackBerry 10 is an exceptional hit, which is far from certain, Mr. Wu said that RIM might be able to continue for only one or two more years. Some analysts had expected that the company would report that subscriber growth had stalled. At a developers’ conference earlier this week, Mr. Heins  said that the number of BlackBerry users had instead grown to 80 million, up from 78 million.

Unlike other smartphone makers, RIM continues to directly profit from every active BlackBerry handset long after its sale. RIM receives monthly subscription fees from carriers for every BlackBerry in exchange for routing the phone’s data through its own, closed network. Under normal conditions, the network allows RIM to provide high security for corporate and government users and it reduces the amount of wireless data consumed by all BlackBerrys.

But it became apparent in the conference call that growth was driven by sales in markets like South Africa and Indonesia where prices and service revenue are low.

“They’re pushing the subscriber base up by offsetting the loss of very high-value customers in markets where it’s critical to build momentum now,” said Charles S. Golvin, an analyst at Forrester Research. “It’s a matter of the market getting away from them.”