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California solar manufacturer files for Chapter 11 bankruptcy
A Silicon Valley-based solar manufacturer recently filed for Chapter 11 business bankruptcy protection with hope of reorganizing its business and beginning anew.
NovaSolar was created just three years ago when a large thin-film solar manufacturer was broken into two parts. The portion that has now filed for Chapter 11 bankruptcy protection had taken over the manufacturer’s management and intellectual property divisions. Over the course of the past three years, the company worked to secure several large solar farm contracts. The company also worked toward the construction of a manufacturing facility in China and a research and development facility in Silicon Valley.
Until just a few months ago, the company contended that it was working to secure more contracts and completion of all construction. The foreign facility was to be completed by the end of 2011 and have 10 production lines.
However, the secured contracts and production facilities were not enough to protect the company from several outstanding debts. It has also been speculated that the company’s structure and management too closely mirrored the failed company from which it was created, leading to financial distress.
The company initially tried to limit losses by furloughing employees and halting all construction at both facilities, including the one in California. A Chapter 11 reorganization was ultimately filed this month.
The Chapter 11 filing will allow the solar manufacturer time to organize its finances and work with creditors. While the process receives attention when engaged by large companies, small business can also use Chapter 11 to help with business reorganization and debt negotiations.
NovaSolar’s bankruptcy filing lists $6 million in assets and $14 million in liabilities. While the bankruptcy is pending, the company will be able to work on restructuring without worrying about creditors attaching liens to company assets or interest accruing on the outstanding debt.
Source: PV Magazine, “NovaSolar bankruptcy announced,” Becky Beetz, June 19, 2012