BREAKING: Unsecured creditors challenge SunEdison settlement

In the seemingly unending saga that is the bankruptcy of SunEdison, its official committee of unsecured creditors filed objections to the plans to sell its shares in its two yieldcos, TerraForm Power and TerraForm Global.

March 31, 2017 Frank Andorka

It wasn’t that long ago – 24 days, in fact – that it seemed the nearly endless saga of SunEdison’s industry-shaking bankruptcy might finally be coming to an end.

On March 7, Brookfield Asset Management committed to purchase a 51% stake in SunEdison’s yieldcos TerraForm Power and TerraForm Global and their combined 3.9 GW of renewable energy assets, which should have brought the bankruptcy story to an end.

Not so fast, said the company’s official committee of unsecured creditors. The committee filed objections to the deal with the U.S. Bankruptcy Court of the Southern District of New York, saying it would unfairly favor the company’s secured creditors and leave them with almost nothing to show after their arduous, nearly year-long battle to get their due.

The objections state that SunEdison, in its proposed agreement with Brookfield, is selling $2.5 billion in TerraForm Global and TerraForm Power to position itself for a Chapter 11 restructuring, while offering the unsecured creditors a mere $16 million, well below what would be appropriate to compensate them for the damage the former solar industry powerhouse has done to them.

At present, the objection is only preliminary, though the committee has promised to file an official objection after it examines the details of the Brookfield deal in earnest. It also asks the court to grant them full discovery powers so they can get all the information they need about the proposed settlement so they can go over it with a fine-toothed comb.

“The creditors’ committee will seek extensive discovery with respect to the [plan], including documents and depositions,” according to court documents. “The creditors’ committee’s ability to fully assess the conduct surrounding the [plan] and file an appropriate objection hinges on the receipt of this discovery.”

The objection could throw a wrench into the deal proposed on March 7, which was expected to close in the second half of this year.

As pv magazine reported at the time, Brookfield would control TerraForm’s 3 GW of operational wind and solar assets and will take over as sponsor of the company under the deal. Brookfield would also buy TerraForm Global outright by acquiring 100% of its outstanding shares.

Even without the unsecured creditors’ objections, the deal was still subject to approval by a majority of Class A shareholders at both companies and the U.S. bankruptcy courts.

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