Employees perform a regular cleaning on the production line at the Suntech Power Holdings facility in Goodyear, Arizona. China’s onetime solar-power giant Suntech plans to file for bankruptcy protection in US court as its leaders negotiate with the holders of more than $500mn in US convertible bonds, according to people familiar with the matter.


Dow Jones/Beijing


China’s onetime solar-power giant Suntech Power Holdings plans to file for bankruptcy protection in US court as its leaders negotiate with the holders of more than $500mn in US convertible bonds, according to people familiar with the matter.
Suntech Power Holdings, which was once the world’s largest solar panel maker, defaulted on its US debt in March, and financial professionals in the Cayman Islands – where the holding company is incorporated – have been trying to negotiate a repayment plan with bondholders.
Suntech plans to file for protection under Chapter 15, the section of the Bankruptcy Code that deals with international insolvencies. If recognised by a US judge, the solar panel maker will receive the benefits of US bankruptcy law, including the so-called automatic stay that halts lawsuits and prevents creditors from seizing assets. The filing is expected by February 21, according to the people familiar with the matter.
A Suntech spokesman couldn’t be reached for comment.
The company’s default on its US bonds last year landed its operations in bankruptcy in China. Suntech Power Holdings has reached a deal to pay back about 30% of what it owes to Chinese creditors. Shunfeng Photovoltaic International, a smaller rival of Suntech, said in November that a court in Suntech’s hometown of Wuxi approved Shunfeng’s purchase of Suntech’s main assets.
But it is still unclear how much money from the reorganised company would eventually flow to the roughly $540mn in US convertible bonds that the company defaulted on in March.
A debt-for-equity transaction could happen through a bankruptcy proceeding that was filed in November in the Cayman Islands. But during those efforts, a group of disgruntled bondholders who were owed about $1.6mn tried to force the company into Chapter 7 bankruptcy by filing an involuntary petition in US Bankruptcy Court in Manhattan against it on October 14.
Suntech officials, represented by the law firm of O’Melveny & Myers, argued for that case to be dismissed, pointing out that those bondholders hold only 0.27% of the company’s debt.
Suntech employed more than 17,000 workers in 2011. But company officials have struggled with $2.3bn in mostly Chinese debt after a market oversupply caused solar panel prices to fall.