News for Credit Professionals       NACM-SE



Another Solar Energy Company Files For Chapter 11

Yet another alternative/renewable energy firm has sought bankruptcy protection following a period of quiet that was preceded in late 2011 by a slew of high profile Chapter 11 filings at such companies.

Michigan-based Energy Conversion Devices voluntarily filed a petition for Chapter 11 protection in the U.S. Bankruptcy Court for the Eastern District of Michigan Tuesday. Energy Conversion Devices, through its subsidiary United Solar Ovonic (USO), manufactured and sold photovoltaic products used largely in commercial rooftop solar panels. The company plans to sell USO, among other assets, as part of its plan to reorganize.

“We firmly believe there is a strong and sustainable commercial market for solar products,” said President/CEO Julian Hawkins. “However, our current capital structure and legacy costs are preventing USO from making the investments necessary for the future of the bodiless without restructuring.

It’s the latest in a series of filings by overleveraged alternative energy companies, which was predicted in NACM’s Business Credit Magazine last spring. Producers have alleged that Asian competitors have been offered subsidies by their governments and can no longer compete because they are undercutting them so drastically on pricing and costs. Others note a major factor is oversaturation in the U.S. solar energy/products manufacturing industry, which saw rapid perhaps unsustainable interest during the waning days of the last economic boom. Prior to Energy Conversion Devices, Stirling Energy Systems Inc. was the most recent to file – but it went straight to Chapter 7 (liquidations) in U.S. Bankruptcy Court in Delaware. It followed previous filings by SpectraWatt Inc., and the controversial Solyndra, a California firm with ties to the Obama Administration still being investigated federally for fraudulent business practices. Months before, BP solar operation halted its Maryland-based solar activities in favor of relocation abroad.

Brian Shappell, NACM staff writer