Cleantech Firm Calls it Quits

Energy Conversion Devices (ECD), a company founded by visionary inventor Stanford R. Ovshinsky in 1960, filed for bankruptcy last week. Executives say they plan to sell the firm’s main business, United Solar Ovonic (USO), which converts amorphous silicon into solar thin films for use in building-integrated photovoltaics.

“Our current capital structure and legacy costs are preventing USO from making the investments necessary for the future of the business without restructuring through the bankruptcy process,” said ECD Chief Executive Officer Julian Hawkins in a statement.

ECD also disclosed that it has sold Ovonic Battery to BASF for $58 million in cash. Ovonic is the inventor and worldwide licensor of nickel-metal hydride rechargeable battery technology and is now pursuing cathode materials for lithium-ion batteries. Ovonic and its research facility in Troy, Mich., will become part of BASF’s new battery materials unit.

Ovshinsky, 89, founded ECD to develop technologies that depend on the conversion of amorphous and disordered materials into structured crystalline materials and back again. The self-taught scientist has only a high school education. In addition to battery and solar inventions, his research at ECD resulted in applications in liquid-crystal displays, hydrogen fuel cells, and phase-change computer memory. He left ECD in 2007 to start Ovshinsky Innovation.

After Ovshinsky left, ECD began to focus on the solar energy business in a bid to become profitable. Previously, ECD had operated more like a stand-alone research laboratory than a business. It subsisted primarily on research grants, development agreements, equity investments, and a small amount of licensing income.

Last week’s filing did not come as a surprise to analysts. At the end of 2011, ECD had to postpone payments to its bondholders. “ECD never generated significant revenue streams in spite of its impressive patent portfolio,” says an analyst who does not want to be identified because of the sensitivity of the bankruptcy proceedings. “It gained some steam starting in 2007 with the solar business but could not cut costs to remain competitive.”