SunEdison Shareholders are Unlikely to Get Paid in Bankruptcy

by San Antonio Attorney

Shareholders are not going to have an official say in the SunEdison Inc.’s bankruptcy case for the reason that the energy company is completely insolvent, with liabilities prevailing over assets by no less than $1 billion, according to a bankruptcy judge ruling.

Judge Stuart Bernstein made a ruling after court battle intended to verify if the solar energy producer has sufficient worth left to give hope that shareholders would still get something in spite of the bankruptcy.

The judge who presided over the Chapter 11 case of SunEdison said is very much unlikely that creditors would get paid. SunEdison would be unable to pay about $1 billion to $2.5 billion of its obligations, according to the judge.

The judge denied a request to create an official group to stand for shareholders in the bankruptcy case, a proposal that was caused partly by distress over the fast reduction of the company’s value. The ruling was signed on Aug. 4 and was filed in the bankruptcy court the following day.

SunEdison Energy’s market value decreased since last year, as business partners and investors lost confidence in the midst of escalating liabilities, unfinished deals and qualms regarding the company’s finances.

The investments of shareholders have been lost, and so they are hoping that an official committee is going to pick up value for them eventually. But a creating a shareholders’ committee will not generate value because it is not there anymore, the bankruptcy judge said.

The weak outlook for the company’s bankruptcy did not surprise bond investors, who have been disposing the debt of the company for up to 6 cents per dollar. That value mirrors their belief that SunEdison’s bankruptcy is not going to generate adequate value to pay them.

During a court hearing, SunEdison’s legal representatives said the company is preparing a business plan that would reorganize the remaining assets after bankruptcy.

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