Suntech announces that it has signed a Restructuring Support Agreement relating to the petition for involuntary bankruptcy filed against it in New York under chapter 7 of the U.S. Bankruptcy Code. The joint provisional liquidators of the company will use commercially reasonable efforts to file the chapter 15 petition by February 21, 2014.
Last November, Suntech (NYSE: STP), once the world’s largest maker of solar modules, filed an application for a provisional liquidation with the Grand Court of the Cayman Islands, where the firm is incorporated. The filing was a signal that the company could go out of business after years of steep declines in panel prices.
Later that month, Suntech announced that it intended to appeal the decision of NYSE Regulation to commence delisting proceedings of the Suntech’s American Depositary Shares (ADSs). A committee of the board of directors of the NYSE was set to make a final determination about Suntech’s ADSs by early this year.
Now, Suntech has announced that it has signed a Restructuring Support Agreement (RSA) relating to the petition for involuntary bankruptcy filed against it in New York under chapter 7 of the U.S. Bankruptcy Code.
The RSA was signed by the petitioners for the chapter 7 proceeding, the company, the joint provisional liquidators of the company (the JPLs), and certain supporting holders of the company’s 3% Convertible Senior Notes that include members of the company’s creditor working group.
Under the RSA, the chapter 7 proceedings in the U.S. have been stayed. In addition, a stipulation to dismiss the chapter 7 proceedings will be executed and filed following recognition of the provisional liquidation proceeding previously filed by the company in the Cayman Islands under chapter 15 of the U.S. Bankruptcy Code.
The RSA provides that, among other things:
The JPLs, on behalf of the company, will use commercially reasonable efforts to file the chapter 15 petition by February 21, 2014.
The petitioners and supporting noteholders will support the chapter 15 petition.
The restructuring must treat all beneficial holders of the notes pari passu.
Upon performance of the RSA, the company is required to dismiss appeals of certain judgments obtained by the petitioners relating to repayment of the Notes held by such petitioners.
The RSA may be terminated if the company fails to file the chapter 15 petition by February 21, 2014, an order obtaining recognition of the Cayman Islands restructuring proceeding is not entered by the U.S. Bankruptcy Court by May 31, 2014, or the Cayman Islands restructuring is not approved by December 31, 2014.
Mr. David Walker, one of the court appointed JPLs, said, “We are pleased to have been able to work with all parties to bring this agreement to fruition. Finding common ground and alignment among each of the Company, its large creditors, its small creditors, and ourselves as the court appointed restructuring professionals represents tremendous progress. This agreement hopefully allows us to continue to proceed with the Company’s Cayman Islands restructuring to preserve value in the interests of all stakeholders.”