Two days after an angel investor dumped $20 million into Sungevity’s coffers to rescue it from bankruptcy, the troubled residential installer changed its name to Spectrum Solar – and slashed 40 more employees with no notice.
Sources close to the company say the layoffs occurred in the Kansas City, Missouri, and Oakland, California, offices, leaving a skeleton crew of approximately 100 employees to handle the company’s extensive residential installation portfolio. The new round of cuts follows nearly 400 layoffs in March, which occurred four days before the company’s Chapter 11 bankruptcy filing.<
"They were trimming the rest of the fat," said one source close to the company, speaking on the condition of anonymity because they are not authorized to discuss the job action. Despite the new layoffs, the remaining employees are anxious to give Spectrum Solar a chance to succeed, the source said.
The cloudy future of the company seemed to brighten on Wednesday, when a bankruptcy judge approved the sale of the company’s assets for $50 million to private equity firm Northern Pacific Group. As part of the deal, Northern Pacific agreed to provide an immediate $20 million infusion of cash – and the money was apparently much needed. Unfortunately, the sunshine didn’t stick around long for its employees.
The company’s precipitously plummeting fortunes came as something of surprise to many in the industry, considering it was a Top 5 residential solar installer as recently as last year. In four short months, however, the company went from sitting astride one of the largest residential solar-installation portfolios to bankruptcy.
Within days of the bankruptcy filing, employees told pv magazine their paychecks had bounced. Then-Sungevity blamed a miscommunication with the bank for the paycheck problems. That didn’t stop a group of former employees, however, from suing the company in civil court for back pay, as well as accrued vacation and sick time compensation. Though sources say the paychecks were replaced, the issue of other compensation had not been resolved at press time.
The trouble started when a proposed “reverse-merger” with investment firm Easterly Acquisition Corp. fell apart with no reason given. The failed deal slammed the door on Sungevity’s goal of accessing public capital between $357 million and $607 million.
Then on March 9, the first round of massive layoffs came to light, followed quickly by news of the rubber paychecks. Four days later, the company declared bankruptcy. Workers, left without paychecks or recourse in the face of the sudden layoffs, former employees filed a lawsuit against the company, saying it broke federal Worker Adjustment and Retraining Notification (WARN) Act provisions by not providing at least 60 days notice to its employees before the March 9 cuts
At press time, there was no word on whether the most recently laid off workers will join the lawsuit since the new round of layoffs also came with no warning.