trending Market Intelligence /marketintelligence/en/news-insights/trending/oGcD6Smepv2az8QjlC4hng2 content esgSubNav
In This List

Appaloosa calls for investigation of SunEdison's pre-bankruptcy dealings


Despite turmoil, project finance remains keen on offshore wind

Case Study

An Energy Company Assesses Datacenter Demand for Renewable Energy


Japan M&A By the Numbers: Q4 2023


See the Big Picture: Energy Transition in 2024

Appaloosa calls for investigation of SunEdison's pre-bankruptcy dealings

DavidTepper's Appaloosa InvestmentLtd. Partnership I is pushing for a wide-ranging investigation ofSunEdison Inc.'spre-bankruptcy conduct.

SunEdisonasked for an examiner after it filedfor Chapter 11 restructuring in New York on April 21, saying it expectedcreditors to request an independent review of "certain prepetitiontransactions." However, the company's motion has been criticized forattempting to control the terms of the investigation.

"Appaloosabelieves that the appointment of an examiner is entirely appropriate,"lawyers for the hedge fund wrote in a May 3 filing in the Bankruptcy Court forthe Southern District of New York. However, SunEdison and its affiliates "seekto unduly restrict the ability of an examiner to conduct a full investigationby limiting the scope, duration and budget of the examiner's work."

SunEdisonspokesman Ben Harborne declined to comment on May 4.

Amongother things, SunEdison wanted an examiner's report within two months andsought to cap related expenses at $1 million. The company warned that "anundefined, open-ended investigation" could put its development business onhold and "lead to a permanent shutdown and loss of pipeline value to thedetriment of all creditors."

Appaloosaand a group of creditors holding around $650 million in unsecured notesobjected to SunEdison's motion. Appaloosa said the company's time frame is inadequate,given the size and complexity of the case, ongoing investigations by the U.S.Justice Department and SEC, and the fact that SunEdison's own took at leastfive months to conduct. The hedge fund said an examiner should have at leastthree months to file a preliminary report.

"Giventhe firestorm surrounding the debtors and the breadth of the relief requested,one might properly view the examiner motion as a not-so-thinly-disguisedattempt to dictate the size, shape, temperature and opacity of the fishbowlthat the debtors just jumped into," lawyers for the noteholders wrote inan April 22 motion.

SunEdisonfiled for bankruptcy after taking on billions in debt to fuel a buying spree.As its stock price plummeted, the company found itself cut off from capital itneeded to fund its business. SunEdison reported$20.7 billion in assets and debts of $16.1 billion.

Appaloosa,which owns approximately 4.5% of the outstanding shares in SunEdison'saffiliated holding company TerraFormPower Inc., suedto block TerraForm Power from helping SunEdison finance its now-defunctacquisition of Vivint Solar Inc.TerraForm Power was not included in SunEdison's bankruptcy.

Thecollapse of the Vivint Solar deal was credit positive for TerraForm Power,Moody's said, in partbecause it spared the yieldco from having to buy Vivint Solar assets under afive-year take-or-pay arrangement.

SunEdison'sother yieldco, TerraForm GlobalInc., suedits sponsor for allegedly diverting funds to repay a margin loan and to "propup its flagging liquidity position" by misrepresenting its need for cash.