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More Troubles for Creditors Tied to Alternative Energy Firms

The ailing U.S. solar products industry continued to get bad news over the last week, and on multiple fronts. As political fallout continues amid the bankruptcy and related fraud allegations of a solar energy products firm last year, it appears the U.S. Department of Energy has brought its activity in dispersing loans to clean energy firms to a grinding halt. Meanwhile, a firm that originally intended on reorganizing through bankruptcy continues to struggle and may have admitted its own death knell—while perhaps foreshadowing that of others—in a Monday court filing.

Reports have started to surface in places including in this week's New York Times that funds from many loans, even authorized ones, have not been released with anything resembling regularity. This could spell bad news for creditors—secured and unsecured—as companies that have become dependent on and planned for such funds could find it more difficult to meet their various debt obligations.

Several sources speculated it is fallout from the Solyndra LLC scandal and the firepower the California company's bankruptcy case gave to Obama Administration enemies. Solyndra, a solar energy products firm that gained notoriety during a well-publicized visit by President Barack Obama in 2010, announced plans to file for bankruptcy protection last year amid a federal investigation into fraudulent business practices. It didn't take long for news to surface that multiple Solyndra backers were also major campaign contributors to Obama.

Solyndra was part of a handful of rapid-fire bankruptcy filings by solar power product manufacturers stung because of U.S. market over-saturation and undercutting by Asian manufacturers on pricing and overhead. Also among the filings over the last six to nine months was Evergreen Solar.

Evergreen filed for Chapter 11 protection in 2011 as part of an attempt to reorganize. However, it seemed liquidation may have been the only realistic route for a troubled company operating in a troubled industry. Evergreen filed a motion in the Third Circuit of the U.S. Bankruptcy Court (Delaware) Monday that would, if approved by the judge, allow it essentially to abandon its Massachusetts plant for no money after efforts to sell or lease it to another party within the industry—or even outside of it as time went on—failed. This leaves the pool of money remaining for creditors even smaller, though a judge's previous ruling mandated that unsecured creditors get a least something in the end, even if it's the likely pennies on the dollar.

Brian Shappell, NACM staff writer