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SunEdison seeks more time to file bankruptcy plan, identifies accounting problems

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SunEdison seeks more time to file bankruptcy plan, identifies accounting problems

wants more time tochart a course out of bankruptcy.

The renewable energy developer, which filed for Chapter 11 protection in the U.S. Bankruptcy Courtfor the Southern District of New York in April, asked Judge Stuart Bernstein onJuly 21 to extend the period during which it has the exclusive right to file a reorganizationplan from Aug. 19 to mid-December. It wants until mid-February 2017 to get a planapproved.

The bankruptcy code gives debtors 120 days after filing for bankruptcyto submit their own Chapter 11 plan and 180 days to solicit approval. After that,any party to the proceeding can file a plan. However, SunEdison said its circumstances— the developer filed for bankruptcy with more than two dozen affiliates and claimsto have around 2,000 affiliated companies worldwide — warrant an extension in orderto "maintaina controlled environment" while it downsizes around "a core group of assets."

"To describe the Debtors' reorganization efforts as largeand complex would be an understatement," SunEdison wrote in a court filing."Regardless of the ultimate scope of the Debtors' business following the saleof certain assets, competing plans at this stage … would be a distraction and injectundue uncertainty into these Chapter 11 Cases to the detriment of the progress achievedto date."

Lenders who provided $300 million in debtor-in-possession financinghave not yet agreed to amend a credit agreement to accommodate SunEdison's request.Under the financing agreement, SunEdison submittedtwo business plans to lenders: one for a reorganization and another for a controlledliquidation. The credit agreement was amendedto give the bankruptcy lenders until June 28 to select a plan.

SunEdison did not immediately respond to a request for commentJuly 22.

The company said it has given more than 200 parties access toits virtual data rooms for potential asset sales and has received bids from morethan 100 parties. So far, asset sales have included the Sunflower wind project in North Dakota and theMount Signal 1 and2 solar projects in California, the company said.

On July 21, SunEdison asked the bankruptcy court to approve theprivate sale of its residential and small commercial business, including contracts,inventory, equipment and intellectual property, to Flextronics International USAInc. for $8.7 million. Flextronics plans to continue operating the business andintends to offer employment to "many" current employees, SunEdison said.

Simon Pratt, director of power and utilities at Rothschild Inc.,which is advising SunEdison in bankruptcy, said a longer sales process is unlikelyto yield a higher purchase price, given "limited demand."

SunEdison filed for bankruptcy after its aggressive debt-fueledgrowth strategy fell apart. The company, in a July 21 court filing, blamed "aconfluence of negative events" that blocked its access to capital. It alsonoted "numerous investigations and other allegations of wrongdoing." Beforefiling for bankruptcy, SunEdison said it was being investigated by the U.S. Departmentof Justice and the SEC.

TerraForm GlobalInc., a SunEdison yieldco that accused its sponsor of illegally divertingfunds, recently said the developer appears to have cross-funded or cross-collateralizedsome projects in India in violation of lending agreements. A SunEdison spokesmandeclined to comment.

In a July 20 financial statement, SunEdison only included revenuefrom third-party sales because pre-bankruptcy accounting that covered intercompanytransactions, including with TerraForm Global and its other yieldco, , "was notalways accurate," the company said.

SunEdison's assets were recently estimated at up to $1.5 billion.A July 20 court filing reported total liabilities of $4.56 billion.