A123 Systems Inc., an MIT spinoff that received several hundred million dollars in federal and state grants to develop and manufacture its nanotechnology-based lithium-ion batteries, said it has agreed to sell its assets to Johnson Controls Inc. (IW 500/33) for $125 million.

"To facilitate the transaction process," A123 Systems said it has filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court for the District of Delaware.

Waltham, Mass.-based A123, which reported a net loss of $258 million for full-year 2011, also said it has secured nearly $73 million in "debtor-in-possession" financing from Johnson Controls to keep its operations going during the sale process.