SunEdison's Canadian Unit Files for Bankruptcy Protection
October 28 2016 - 4:40PM
Dow Jones News
Renewable energy giant SunEdison Inc. has placed its Canadian
arm into bankruptcy while the parent company seeks more time under
court protection in the U.S. to sell off assets and work out a
strategy for repaying billions of dollars in debt.
The company's Canadian division, which also designs and develops
renewable energy projects, says it can no longer fund its
operations. It sought protection Thursday from both creditors and
lawsuits under Canada's Companies' Creditors Arrangement Act, or
CCAA, the equivalent of chapter 11 in the U.S.
The Canadian operation, which is concentrated in Ontario, says
its financial woes are largely tied to liquidity issues stemming
from the bankruptcy of its parent company in the U.S. The Canadian
unit's businesses listed about $80 million in total assets and
about $30 million in liabilities, in addition to about $90 million
in other potential liabilities that are the subject of pending
litigation.
In court papers filed Thursday in New York, SunEdison said it is
at a "critical juncture" in its own chapter 11 case and asked
Bankruptcy Judge Stuart Bernstein to give it until at least Feb. 15
to formulate a plan that maximizes the value of its assets.
A hearing on SunEdison's request to extend the U.S. proceeding
is scheduled for Nov. 17. A so-called exclusivity extension, common
in chapter 11 cases, would keep SunEdison in the driver's seat and
bar creditors from proposing their own plans for the company's
future. Allowing exclusivity to expire would jeopardize the work
the company has already put into the bankruptcy, lawyers for
SunEdison said in court papers.
The bill for lawyers and other professionals working on the case
already exceeds $60 million, court papers show.
SunEdison has been selling off bits and pieces of the business
it built up in a debt-fueled expansion that abruptly collapsed
earlier this year. Since then, the company says it has completed
sales of 19 assets, bringing in proceeds of about $609 million.
The sales, which the company plans to continue, include a
collection of its North American solar- and wind-power projects
that it won court approval last month to hand off to an affiliate
of NRG Energy Inc. for $144 million.
SunEdison says it also needs more time to determine the right
path forward for handling its complex ties to TerraForm Global,
Inc. and Terraform Power Inc., the so-called yieldco companies that
are separate publicly traded companies and were part of the
financial engineering that helped fuel SunEdison's boom. The two
yieldcos have not sought bankruptcy protection.
SunEdison says it is exploring a number of options, including a
sale of its controlling stakes in the yieldcos, but hasn't yet
named lead bidders.
Lawyers for SunEdison must also work out claims by TerraForm
Global and Terraform Power that SunEdison's troubles have done more
than $3 billion of damage in the aggregate to their businesses.
SunEdison says it disagrees with many of the claims but is in
settlement talks with the yieldcos, another reason why it has asked
the judge to give it more time.
SunEdison filed for chapter 11 while under investigation by the
Securities and Exchange Commission and Justice Department
concerning its cash levels and dealings with TerraForm Global,
among other things.
Judge Bernstein has already said SunEdison is "hopelessly
insolvent" and likely to leave behind more than $1 billion in
unpaid debts.
Peg Brickley and Jacqueline Palank contributed to this
article.
Write to Tom Corrigan at tom.corrigan@wsj.com
(END) Dow Jones Newswires
October 28, 2016 16:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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