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A 45-day U.S. government review period that could block the sale of A123 Systems Inc. to a Chinese firm begins Thursday.

A federal bankruptcy court judge in Delaware authorized the sale of A123 Systems to the Chicago-based subsidiary of a Chinese firm on Tuesday.

Massachusetts-based A123 is developing battery technology for electric cars, including those produced by Fisker Automotive. It received $133 million in stimulus funding from the U.S. Energy Department.

In approving the deal, the judge decided not to award Johnson Controls Inc. a $5.5 million breakup fee at this time.

Glendale-based Johnson Controls contends it is entitled to the fee because of its role as the lead bidder for A123. Johnson Controls participated in the bidding for A123, but withdrew early Saturday when the price became too steep.

Wanxiang America, a subsidiary of Wanxiang Group Corp., won the A123 business for $256.6 million. That's more than twice the initial offer Johnson Controls had made for the company, but Johnson Controls submitted higher bids Friday and early Saturday, withdrawing after a final bid of $251 million.

Alex Molinaroli, president of Johnson Controls' power solutions business, said this week the company remains interested in acquiring A123 should federal authorities decide to reject the deal.

A group of cabinet secretaries led by U.S. Treasury Secretary Timothy Geithner is expected to begin a 45-day review process to determine whether the purchase would pose a threat to national security.

Wanxiang is China's biggest automotive parts supplier and is not state-owned.

Bankruptcy Judge Kevin Carey ordered the breakup fee of $5.5 million be put in escrow, after lawyers for A123 creditors said in court that Johnson Controls had begun lobbying in Congress to thwart the Wanxiang deal.

"Something has been raised here today that gives me pause," Carey said Tuesday.

Josh Feltman, a Johnson Controls attorney, told Carey he had no personal knowledge of the company working to scuttle Wanxiang's purchase of A123. But he said he was aware that some members of Congress opposed the sale to Wanxiang and would have preferred that Johnson Controls won the auction.

Illinois-based Navitas Systems was approved to acquire A123's military business for $2.25 million.

Johnson Controls, members of Congress and the advocacy group Strategic Materials Advisory Council contend that A123's core technology is the same -- on the commercial side and the military side -- so that selling the technology to China would provide key technology that could be transferred to Chinese military use.

"Granting a Chinese company access to even the commercial segment of A123's business will ultimately give it access to Department of Defense financed military technology, due to the similarities in intellectual property across all business lines," the materials advisory council said Tuesday. "A123's technology may serve as the backbone not only for future power grid technologies but also for key military applications of the near future."

The Associated Press and Bloomberg News contributed to this report



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