The solar energy industry has faced distress over the past 2-1/2 years leading to bankruptcy filings and company closings.
From early 2022 to mid 2024, 53 solar companies have closed their doors permanently, according to solar energy system warranty provider SolarInsure's website. The company also listed 14 major solar energy companies that have filed for either Chapter 11 reorganization or Chapter 7 liquidation.
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For example, in 2022 North Carolina solar energy company Pink Solar filed Chapter 11 and shut down operations permanently.
Things got worse for New Jersey-based Vision Solar, which in December 2023 filed Chapter 7 bankruptcy, liquidated and shut down its business, after Connecticut Attorney General William Tong sued the company in March 2023 after an investigation into alleged high-pressure sales tactics, misrepresentations, delays and unpermitted work.
Liquidations continued into 2024 as on Feb. 5 Solcius and on Feb. 6 Sunworks each filed Chapter 7 petitions to wind down their operations. Chapter 11 filings, however, are common as well.
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Solar company iSun files Chapter 11 to sell assets
Solar energy services company iSun and 11 affiliates on June 3 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington with plans to sell its assets to its bridge loan provider Clean Royalties as a going concern, subject to higher and better offers.
As one of the largest solar energy services and infrastructure deployment companies in the country, iSun provides solar, storage, and electric vehicle infrastructure; design, development and professional services; engineering, procurement, installation, operations and maintenance, and storage for residential, commercial, industrial and utility customers.
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The debtor has been struggling with annual losses since its business combination merger in 2021 and reported net losses of $53.8 million in 2022 and $19.4 million in 2023. The company is operating at a $250,000 deficit each week and forecasts a loss of $10 million for 2024, according to a declaration by CEO Jeffrey Peck.
Nasdaq on May 23 suspended trading of iSun's shares in preparation of a delisting.
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The company listed over $49 million in debts in court papers. It had a total of $9.8 million in long-term debt, as of Dec. 31, 2023, that includes an $8 million revenue loan from Decathlon Growth Credit, which is secured by substantially all the company's assets, according to court papers.
Decathlon agreed to subordinate itself to liens in favor of Clean Royalties' subsequent $1 million bridge loan.
The debtor also has $1.2 million in vehicle loans, $1.13 million in term loans through NBT Bank, and outstanding merchant cash advance debts totaling $2.64 million. The company has $34.3 million in trade debt, contract liabilities and lease liabilities.
The debtor said in court papers that rising interest rates had an adverse impact on its business by increasing the cost of capital and its interest rate expense on variable rate debt. Increased interest rates has also negatively impact the debtor's ability to arrange financing for its customers on favorable terms to facilitate its customers' purchases of the company's solar energy systems.
The majority of iSun's revenue to date has been from sales of its solar energy systems. Rising rates have depressed solar system sales as many customers finance their purchases, the declaration said.
Clean Royalties, an affiliate of Houston-based Siltstone Capital, will serve as the stalking-horse bidder in a Section 363 sale of the company. The stalking horse has agreed to also provide $4 million in debtor-in-possession financing to fund operations and the bankruptcy case.
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