Voices Of Desperate SunEdison Shareholders Flood Docket

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Law360, New York (May 10, 2017, 8:24 PM EDT) -- In a flurry of objections filed Tuesday and Wednesday, several dozen pained SunEdison Inc. shareholders urged a New York bankruptcy judge to step in and force the green energy giant to explain just how it lost billions of dollars in investment capital.

As of Wednesday afternoon, roughly 50 SunEdison shareholders submitted objections to the company’s Chapter 11 plan disclosure statement, piggybacking on a more formal objection filed by an ad hoc committee of the company’s shareholders that complained about being left in the dark throughout the debtors’ bankruptcy case.

In that Monday filing, the committee said SunEdison’s liquidation plan and disclosure statement does not explain why the energy company chose liquidation over reorganization, does not say where billions the company raised in debt and equity offerings went, and provides an “ambiguous” description of the plan itself, omitting details including the amount of each class of claims and what each class will receive and appears to require claimholders to release any third-party claims sight unseen.

In their individual letters to U.S. Bankruptcy Judge Stuart M. Bernstein, many equity holders described how they were misled by the company’s positive financial statements before it began its spiral towards insolvency, with some saying that they put nearly all of their savings into the company because they believed, with federal government backing, it was destined for growth.

“I invested in SunEdison wholeheartedly knowing that this investment would give my family a chance for a better life while saving the planet at the same time,” wrote one investor.

“I have never felt so betrayed by a company and, unfortunately, this has led to my lack of faith in the stock market and even the United States government as a whole,” said another.

SunEdison, which develops renewable energy products around the world, filed for Chapter 11 protection in April 2016, loaded with more than $8 billion in debt and under scrutiny from government regulators. The bankruptcy filing capped the fall of a business that had aimed to be the largest renewable energy company in the world.

While rankled by accusations that it intentionally defrauded the market and investors in its failure to stave off major liquidity problems stemming from a massive expansion, SunEdison has also been blamed for running its Chapter 11 case chiefly for the benefit of its secured lenders.

The ad hoc shareholder committee, which was formed after the court refused to appoint an official committee, said in its objection Monday that the disclosure statement claims the company raised $24 billion in debt and equity offerings between 2013 and 2016 but fails to explain why the company is currently unable to satisfy $5 billion in claims. They also argue the disclosure says the company has invested $9 billion in its subsidiaries, but provides no additional information about them or about the status of the company’s ongoing development projects.

The investors said the plan fails to quantify either the amount of claims in each class or an estimate of the value of the consideration to go to either the second lien claimholders or the general unsecured claimholders, and also does not provide information to determine if claimholders would be better off under Chapter 7.

In their support for the committee’s objection, many of the shareholders that filed individual letters said that they held on to their equity in the company because they were led to believe that it was going to reorganize and restructure.

“I still have not sold my shares because I still believe that there will be value left over after reorganization while keeping the current shareholders intact,” one individual said. “There are many unanswered questions that we shareholders deserve and I hope that the court sees it in their heart to ‘do the right thing.’”

A media contact for SunEdison did not immediately respond to a request for comment Wednesday evening.

SunEdison is represented by Anthony W. Clark, Jay Goffman, J. Eric Ivester, Shana Elberg, James J. Mazza Jr. and Louis S. Chiappetta of Skadden Arps Slate Meagher & Flom LLP.

The committee is represented by Ancela R. Nastasi, Marshall E. Tracht and Moshie Solomon of Nastasi Partners PLLC.

The case is In re: SunEdison Inc., case number 1:16-bk-10992, in the U.S. Bankruptcy Court for the Southern District of New York.

--Additional reporting by Rick Archer. Editing by Joe Phalon.