Updated. The latest but not unexpected twist to Suntech Power Holdings financial position is that the company is seeking US court, Chapter 15 liquidation, according to an SEC filing by the NYSE-listed company.
Initially, Suntech has filed an application for a provisional liquidation with the Grand Court of the Cayman Islands, the jurisdiction of its incorporation. This would provide the company with the correct legal documentation for protection against creditors and sets in motion the opportunity to seek Chapter 15 liquidation in the US courts, protecting it from creditors in the US.
Suntech recently reported that several small bondholders were seeking winding-up orders in US courts as part of Suntech’s previous bond payment default. Suntech still has an agreement with a larger group of bondholders, known as the Creditor Working Group to negotiate its way out of the financial problems associated with the bond default.
Suntech Wuxi, the holding companies major manufacturing operations in Wuxi, China was recently provisionally sold to Shunfeng Photovoltaics, via the administrator handling the company’s insolvency proceedings.
According to Cayman Island court papers filed by Suntech Power Holdings in regards to its liquidation plans, the holding company would not be a manufacturer of PV modules but become an independent reseller and distributor of PV products, post insolvency proceedings, according to the Wall Street Journal.
The report noted that Suntech Power Holdings had as assets US and Europe that included sales-and-distribution businesses, as well as project developer arm, Global Solar Fund.
However, the holding company stated in the court filings that at the end of June, 2013 it had only US$4.3 million in cash.
Global Solar Fund (GSF) is currently being investigated by Italian courts, which have already seized 47 PV power plants with a total generating capacity 37.8MW or around 26.9% of GSF’s total generating capacity, according to Suntech in a recent statement.
Yet feed-in tariff (FiT) payments have not been stopped to Suntech while the investigation into possible fraud continues, suggesting that Suntech is receiving regular payments under the Italian FiT system. Questions were raised by the courts over whether some of GSF’s power plants received FiT payments when they were not grid connected.