SunEdison creditors launch lawsuit against lenders in bankruptcy battle

AlTi Global

21/10/2016 16:47

By Jessica DiNapoli 
    NEW YORK, Oct 21 (Reuters) - A group of SunEdison Inc 
 SUNEQ.PK  lenders took control of the renewable energy 
developer after inking a "sweetheart deal" to try to save their 
investment as the company approached bankruptcy, hurting other 
creditors, according to a lawsuit filed late Thursday in U.S. 
bankruptcy court. 
    SunEdison transferred "hundreds of millions of dollars" to 
the lenders, which included buyout firms Apollo Global 
Management LLC and Cerberus Capital Management LP and more than 
15 hedge funds, before it filed for bankruptcy, hurting the 
company's other creditors, according to a redacted version of 
the complaint. A full copy was filed under seal. 
    SunEdison's unsecured creditors, including Vivint Solar Inc 
 VSLR.N , filed the lawsuit. Vivint Solar had planned a $2.2 
billion merger with SunEdison, but the deal collapsed earlier 
this year. 
    A call to a SunEdison spokesman was not immediately 
returned. Cerberus and Apollo had no comment. 
    The unsecured creditors are asking a U.S. bankruptcy judge 
to limit how much the lenders can recoup on their investment.   
    The lawsuit comes as SunEdison looks to sell its shares in 
its sister companies TerraForm Global Inc  GLBL.O  and TerraForm 
Power TERP.O .  urn:newsml:reuters.com:*:nL2N1BV0PA A deal for these so-called 
"yieldcos" has yet to take shape. It could be a sale of the 
companies or of the renewable assets they hold, a person 
familiar with the matter said last week. 
    A less-likely option is the reorganization of SunEdison 
around its controlling shares in the companies, the person said. 
    SunEdison, whose bankruptcy was the biggest of 2016 to date, 
has not yet filed its plan of reorganization with the court. 
    The lawsuit focuses on a January $950 million "sweetheart 
deal" that also enhanced collateral for other lenders. SunEdison 
finalized the deal hoping to "put off the day of reckoning" and 
"hide  its  failed business strategy and mismanagement," the 
suit says. 
    According to the complaint, the secured lenders forced 
SunEdison to wait three months and 10 days to file for 
bankruptcy in late April to confirm that the collateral backing 
their investments would be secure under bankruptcy rules.  
    The lenders decided to take this tactic after the January 
deal was finalized and they realized the extent of financial 
distress at SunEdison, the complaint states. 
    One group of lenders targeted by the lawsuit helped protect 
their investment in the company's bankruptcy loan.  urn:newsml:reuters.com:*:nL2N17N1PM 
    SunEdison once had a market capitalization of nearly $10 
billion, but the bankruptcy judge overseeing the case has called 
the company "hopelessly insolvent."  urn:newsml:reuters.com:*:nL1N1AT0VE 
 
 (Reporting by Jessica DiNapoli; Editing by Dan Grebler) 
 ((Jessica.DiNapoli@thomsonreuters.com; 646-223-4678;)) 
 
Keywords: SUNEDISON CREDITORS/LAWSUIT