Solyndra LLC, a solar-panel maker whose $535 million federal loan guarantee was criticized by Republican lawmakers, filed for bankruptcy, at least the third solar company to seek court protection from creditors since August.
The company said it had as much as $1 billion of debts and as much as $1 billion of assets in a Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Delaware. More than $783 million of the debt was senior and secured, following a February restructuring, it said.
Solyndra said it failed because it couldn’t compete with foreign manufacturers, funded by their governments, which produced an oversupply of panels at low prices and offered buyers lengthy payment terms. Demand for its panels also fell as European governments reduced incentives for buying solar energy, said W.G. Stover, chief financial officer, in a filing today.
“The combination of general business conditions and an oversupply of solar panels dramatically reduced solar panel pricing worldwide,” he said. “Solyndra’s ability to timely collect on its accounts receivables was negatively impacted as foreign competitors offered extended payment terms, resulting in Solyndra’s customers refusing to honor their previously agreed payment terms.”
While in bankruptcy, Solyndra will either try to sell its business or liquidate for the benefit of creditors, he said.
Energy Department Guarantees
In recent weeks, the U.S. Energy Department, which provided the loan guarantee, negotiated with Solyndra investors for bridge financing to give the company time to find a new source of capital, Stover said. Solyndra, based in Fremont, California, was told on Aug. 30 there was no financing, he said.
On Aug. 31, the closely held company shut down, firing 1,100 employees.
Solyndra produces cylindrical panels that convert sunlight into electricity using a thin-film technology based on copper- indium-gallium-diselenide.
The company said it has borrowed $527 million using the $535 million Energy Department loan guarantee. Republican lawmakers in the U.S. House of Representatives have criticized the loan guarantee, questioning whether Solyndra deserved the help. Earlier this year, the investigations subcommittee of the House Energy and Commerce Committee began probing the guarantee.
Obama Visit
President Barack Obama, who visited the company’s plant in 2010, and Democratic lawmakers said the U.S. must keep supporting renewable energy even amid Solyndra’s failure.
The biggest unsecured claims are held by two trade creditors, Schott North America Inc., owed $7.7 million, and MGS Mfg. Group, owed $7.5 million. Unsecured lenders include the Howard Hughes Medical Institute, owed $4.8 million, OZ Offshore Capital Lenders LLC, with a $3.7 million loan, and US Venture Partners X LP, owed $3.5 million.
Argonaut Ventures holds almost 39 percent of Solyndra’s parent, 360 Solar Degree Holdings Inc. Madrone Partners holds 13 percent of the equity; USVP Venture Partners holds about 9 percent, and Rockport Capital Partners owns about 7 percent, according to filings. The company said it plans to hire Pachulski Stang Ziehl & Jones LLP as legal adviser.
About 113 employees remain “to assist the debtors with their restructuring efforts,” the company said in a filing seeking permission to pay them. The average bi-weekly payroll will be about $650,000, down from $3.5 million before the firings, Solyndra said.
Evergreen Solar Inc. (ESLR) filed bankruptcy last month, blaming price declines and competition from government-subsidized solar- panel makers in China.
The case is In re Solyndra LLC 11-12799, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporters on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net; Joe Schneider in Sydney at jschneider5@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
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