Creditors are Taking Legal Action Against Lenders in SunEdison’s Bankruptcy Case

by San Antonio Attorney

Some of SunEdison’s lenders have gained control over the company after entering a deal that would attempt to recover their investments as SunEdison was nearing bankruptcy.  The deal is causing harm to other creditors, according to a court action filed in the bankruptcy court on Oct.  19.

SunEdison turned over hundreds of millions in dollars to Cerberus Capital Management, Apollo Global Management and at least 15 hedge funds.

A lawsuit was filed by the unsecured creditors of the company.  One of them is Vivint Solar that was supposed to merge with SunEdison but the plan fell through earlier this year.

The unsecured creditors want to restrict the amount of recovery that lenders can get.

The legal action comes as the company considers to sell its stake in its sister companies TerraForm Power and TerraForm Global.  An agreement for these companies has not been finalized.  The companies could be sold off or just some of their assets, according to reports.

A third option is the restructuring of SunEdison in terms of its controlling interests in the companies, according to reports.

SunEdison filed the biggest bankruptcy case this year and it has not yet filed a plan in court.

The legal action concentrates on a $950 million deal last January that also significantly increased guarantee for other lenders.  The company sealed the deal to try to delay castigation and hide ineffective business management, the lawsuit said.

The complaint also said that secured lenders made SunEdison wait for more than three months before it seek bankruptcy relief in April to make sure that the collateral assistance of their investments would be protected under the rules of bankruptcy.

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