Suntech鈥檚 filing suggests end is near
Print Edition
China’s Suntech Power Holdings Co, once the world’s largest maker of solar panels, has filed for provisional liquidation, signaling that it may go out of business after years of steep declines in panel prices.
“We do think this is the end for Suntech,” Raymond James analyst Ryan Berney said.
Suntech filed for provisional liquidation in the Cayman Islands, where it is incorporated.
A provisional liquidation is an emergency procedure that a company can apply for only after a petition to wind up has been presented at court.
Suntech also said it would consider pursuing a Chapter 15 filing in the United States that would allow US courts to recognize a foreign bankruptcy as the main proceeding and block creditors from seizing US assets.
A group of Suntech creditors in the US filed a Chapter 7 involuntary bankruptcy petition against the company in October. Suntech has said it will contest the attempt to wind up the company.
In a Chapter 7 bankruptcy, a trustee is appointed to oversee the sale of assets to raise money to repay creditors.
“The idea is to reach a deal through the Cayman proceedings and (Suntech) would try to enforce that in the US through a Chapter 15 and use that to dismiss the involuntary bankruptcy,” said Ken Coleman, a partner at law firm Allen & Overy LLP.
Coleman is not involved in the Suntech case.
Rapid capacity expansion by Chinese manufacturers from around 2008 created a global glut of panels just as countries in Europe, traditionally the largest solar market, withdrew subsidies to consumers. The subsequent fall in prices forced many producers to shutter production.
China’s Shunfeng Photovoltaic International Ltd agreed last week to buy Suntech’s main manufacturing unit, Wuxi Suntech, for US$492 million, leaving Suntech with few assets.
Wuxi Suntech was dragged into bankruptcy proceedings by Chinese creditors in March, days after Suntech defaulted on a principal payment on US$541 million of convertible bonds.
“Shunfeng is buying essentially all of Suntech’s production capacity and technology portfolio, apparently leaving the US-listed holding company a quasi-empty shell,” Berney said.
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