Troubled solar power developer SunEdison Inc. has agreed to allow its unsecured creditors to take on the role of bankruptcy investigators, probing for grounds for potential lawsuits against directors, officers and others involved in its troubles.
Announced at a bankruptcy court hearing in New York, the agreement was reached in talks about SunEdison’s finance package, which was under attack from junior creditors wary of allowing the company to go even deeper in debt.
SunEdison, which last year broke ground on Comanche Solar near Pueblo, Colorado’s largest commercial solar power system, was carrying $16 billion in debt when it filed for Chapter 11 bankruptcy protection in April and under investigation by the Securities and Exchange Commission and the Justice Department.
The bankruptcy followed a precipitous loss of market confidence and value in the company, which grew quickly by way of financial engineering to become one of the world’s largest launchpads for alternative power projects.
Questions about its finances arose last year and have yet to be answered. SunEdison said an internal investigation showed no intentional wrongdoing, but the company hasn’t yet filed audited financial statements for 2015.
Creditors began scrambling for information about the state of SunEdison’s financial affairs early in the bankruptcy. In addition to the lack of corporate-level financial data, “there is a dearth of verifiable information regarding what’s happening” at SunEdison subsidiaries that are not involved in the bankruptcy, said Christopher Shore, lawyer for investors holding about $1 billion worth of SunEdison bonds.
In exchange for the right to investigate, SunEdison’s official committee of unsecured creditors agreed to drop opposition to the company’s bankruptcy financing package. In court papers, lawyers for unsecured creditors said SunEdison’s lenders had exacted a heavy price for $300 million worth of liquidity. The company said the loans were the only realistic option for SunEdison and were its best chance of a successful bankruptcy.
Lenders made other concessions to win over the official committee, which speaks for all SunEdison junior creditors. Two of SunEdison’s most significant creditors, TerraForm Power Inc. and TerraForm Global Inc., reached a separate agreement designed to make sure the company that once owned them will be able to meet its obligations to them.
The TerraForm companies are separate publicly traded companies that own energy projects developed by SunEdison, including an 8-megawatt installation near Alamosa.
