Below is our initial take on recent bankruptcy-related developments:
Sunnova files for bankruptcy on residential solar woes | Reuters
On Sunday, the residential solar panel installer announced that it had filed for Chapter 11 bankruptcy, making it the second company of its kind to file this month.
S&K Take: There has been a flurry of activity in this case after a quiet start. Affiliate Sunnova TEP Developer filed on June 2, with the rest of the debtors following suit a week later in what Judge Perez called a “slow motion filing.” Debtors’ counsel from K&E noted that the lone entity filed early to preserve certain preference claims. The rest of the debtors tried to cut a deal to enter bankruptcy with an agreed path forward but couldn’t reach consensus prior to filing, determining that they “just have to get on with it.” The first week of the case saw a private sale to a non-debtor affiliate, Sunnova TEP Holdings, of a number of the debtors’ projects for $15 million in cash. Many of those projects were stalled by dealers associated with the deals that have gone unpaid. The debtors sought, and ultimately obtained, approval of the sale (to be funded by TEPH through liquidity under its own loan facility) because 1) if they didn’t get approval they were out of cash and 2) approval of the sale was, according to the debtors, the only way to get the dealers paid. The debtors followed with a $90 million DIP facility that is primed to be credit bid for the balance of the debtors’ assets. That DIP was approved on an interim basis, giving the debtors access to another $15 million. A second sale, this one for $16 million, was also approved. The “three-legged stool” of the DIP and the two sales will purportedly provide the debtors “just enough” runway for a 45-day sale process “in a way that the world knows that Sunnova is not desperate.” The stool sounds like it could use a fourth leg, but the debtors seem to be pulling the pieces together one by one. We will be keeping a close eye on this one, particularly considering how quotable it has already been.
Regional carrier Silver Airways says it’s shutting down operations | AP News
Airport passengers were stranded on Wednesday as the airline announced that it had sold its assets through Chapter 11 bankruptcy to a holding company that “determined to not continue Silver’s flight operations.”
S&K Take: Not something that you see every day. What had been a going concern sale that was subject to regulatory approvals endured several adjournments. Ultimately, and seemingly out of the blue, the debtors informed the Court that the sale was no longer a going concern. The purchaser would instead pursue an asset transaction. Apparently, there had been some operational issues at the company, which led to the accrual of significant unexpected administrative expenses and limited liquidity. The purchaser wasn’t going to foot the bill, and 500 employees had to be dismissed on the spot. The airline sent messages to customers asking them to “[p]lease do not go to the airport.” All of this at 11 p.m. on Tuesday. And we thought flying out of Newark was bad. Some folks were reportedly stranded abroad, but they’ll get a refund (hopefully not a claim for a refund), so they have that going for them, which is nice. Brutal turn of events, and Judge Russin let the courtroom hear about it, calling the case a “failure” with a “horrible” end, and noting that he felt “abused by the process.”
Nissan supplier Marelli files for Chapter 11, secures $1.1 billion in new financing | Reuters
The Italian-Japanese auto interior and lighting manufacturer, which is owned by US private equity firm KKR, filed for bankruptcy Wednesday.
S&K Take: Another significant filing this week. While not as interesting early as Sunnova, Marelli merits a spot in our top 3 stories this week. This case was filed with an RSA which would effectuate a debt-for-equity transaction. Prepetition lenders are putting in $1.1 billion in DIP financing, with a 1:1 roll-up. The DIP will be used to refinance $350 million in senior bridge financing, and partially converted into 100% of NewCo’s equity. That it, unless someone shows up to buy the whole shebang in the next 45 days, during which the debtors have a no-shop provision and will be marketing their assets. GUCs will purportedly pass through. The deal would significantly delever a business that was carrying almost $5 billion in debt.
