
Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Author: Joel R. Glucksman
Date: December 13, 2016

Partner
201-896-7095 jglucksman@sh-law.comAfter filing for chapter 11 bankruptcy earlier this year, renewable energy developer SunEdison recently found a buyer for some of its assets. In a recent blog post, NRG Energy announced it had purchased 1,500 megawatts worth of assets from SunEdison. Those properties consist of utility-scale wind and solar-photovoltaic projects that are either currently in operation or are being developed throughout the U.S.
Back in August, The Wall Street Journal reported that Judge Stuart Bernstein ruled that shareholders wouldn’t have an official say in SunEdison’s filing because the company’s debts dwarfed its assets by approximately $1 billion. The shareholders wanted an official committee to represent them in the bankruptcy case.
“[Shareholders] have lost money on their investments, and hope that an official committee will capture value for them in the end,” said Bernstein. “The appointment of an Equity Committee, however, will not create value where it does not exist.”
At the time of the Journal’s story, bond investors were trading SunEdison’s debt for 6 cents on the dollar or less, a sign that many had little confidence in the bankruptcy process being able to turn things around for the renewable energy developer.
Forbes contributor Christopher Helman noted that SunEdison’s bankruptcy is part of a bigger issue facing the the energy sector as a whole. He acknowledged Peabody Energy, Energy XXI and Goodrich Petroleum’s recent bankruptcy filings, asserting that “easy” financing enabled companies to grow too fast in anticipation of favorable projections.
Focusing on SunEdison, Helman referenced CEO Ahmad Chatila’s assertion that the renewable energy giant would be as big as Exxon Mobil by 2020. The company made several acquisitions after the fact, buying First Wind for $2.4 billion in 2014. Overall, the company kept initiating projects without generating enough revenue to pay back lenders.
The energy sector’s quite competitive, so it’s not surprising that companies specializing in all kinds of energy products are facing bankruptcy. This competition is only set to grow with the rise of natural gas production, which increased from 2.20 quadrillion cubic feet to 2.23 quadrillion cubic feet on a month-to-month basis in August 2016, according to the U.S. Energy Information Administration. For instance, the U.S. Energy Information Administration found that coal production declined 17 percent from 2015 to 2016.
It’s possible NRG Energy may breathe new life into SunEdison’s projects. With further innovation, the company could see a sizeable return on its investments, assuming it finds a way to produce electricity at a lower cost than natural gas companies.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
For more articles regarding energy companies filing for bankruptcy, check out:
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