SunEdison and Vivint Can’t Agree on Timetable for Merger Suit

  • Bankruptcy judge witholds decision on letting case proceed
  • Court approves auction procedures for more asset sales

The judge in SunEdison Inc.’s bankruptcy case held off ruling on whether Vivint Solar Inc. can proceed with its $1 billion lawsuit over a failed merger because the two companies can’t agree on a timetable for the litigation.

U.S. Bankruptcy Judge Stuart Bernstein ended a hearing in Manhattan Thursday without deciding whether to lift the “automatic stay” that shields bankrupt companies like SunEdison from lawsuits. SunEdison has said that while the dispute needs to be worked out, it’s too early in the Chapter 11 process to litigate the claim.

Steven Schatz, a lawyer for Vivint, told the judge the two sides were still haggling over how soon a trial might occur. The suit itself is in Delaware Chancery Court.

“We thought we were close,” he told Bernstein. “Frankly, at best, we’re no closer. Maybe further apart.”

Bernstein could issue a ruling in a court filing later.

The outcome of the dispute could shape SunEdison’s bankruptcy, because Vivint’s claim makes it the company’s largest unsecured creditor. The merger, which collapsed amid a decline in the renewable-energy business starting last year, was supposed to combine the world’s largest clean-energy company with one of the leading U.S. rooftop solar installers.

Status Report

SunEdison still hasn’t decided on the ultimate structure of its Chapter 11 case, according to a status report filed on the eve of Thursday’s hearing. That uncertainty persists even as the company has agreements to sell over 3.5 gigawatts of projects. Questions have been raised over whether SunEdison will reorganize as a continuing business or liquidate.

Under the July 2015 merger agreement, SunEdison was to buy Vivint in a deal valued at $2.2 billion at the time. The terms were later revised down to $1.9 billion as SunEdison’s financial health began to worsen. 

Ultimately, the deal fell apart and Vivint sued in Delaware Chancery Court in March, accusing SunEdison of violating the merger agreement. SunEdison filed for bankruptcy in April, triggering the stay.

Lifting that stay this early in the Chapter 11 process, when SunEdison is still trying to maximize value for its creditors, “would create an unnecessary drain on the estates’ resources,” the company said in court papers.

Vivint said the long wait between the announcement of the merger agreement and the deal’s eventual collapse hurt its business. It wants the dispute addressed sooner rather than later because the claim is “is important to the formulation, evaluation and approval” of a consensual bankruptcy plan. The Chancery court should be able to hold a quick trial on the merits given its expertise in merger litigation, according to Vivint.

Asset Sales

Meanwhile, Maryland Heights, Missouri-based SunEdison is in the midst of the largest-ever sell-off of renewable-energy assets. 

Bernstein said Thursday that the company can auction equity interests in utility project companies with an opening bid of $144 million by NRG Renew LLC. The projects include solar assets in Utah, California and Texas. 

The utility business unit builds wind and solar farms, and sells power to utilities and other customers. The business also sells some completed projects to “yieldco” subsidiaries and other third parties.

NRG Renew also agreed to buy 26 smaller projects from SunEdison in various states of completion, said Erik Linden, an NRG spokesman. 

“NRG is uniquely positioned to quickly bring these assets into operation.” Linden said in an e-mail Thursday.

The judge also approved a procedure to sell stakes in a 136-megawatt portfolio of commercial and industrial projects being developed in Minnesota. An affiliate of Edison International has set a leading bid of $79.8 million. The projects comprise 15 self-developed assets and seven being co-developed with EcoPlexus Inc.

The case is In re SunEdison Inc., 16-10992, U.S. Bankruptcy Court, Southern District of New York (Manhattan).