(Adds lawyer comment, background)
Nov 6 China's Suntech Power Holdings Co Ltd
, once the world's largest maker of solar panels, filed
for provisional liquidation, signaling that it may go out of
business after years of steep declines in panel prices.
Suntech's shares fell as much as 23 percent to $1.15 on the
New York Stock Exchange on Wednesday.
"We do think this is the end for Suntech," Raymond James
analyst Ryan Berney told Reuters.
Suntech filed for provisional liquidation in the Cayman
Islands, where it is incorporated.
A provisional liquidation is an emergency procedure that a
company can apply for only after a petition to wind up has been
presented at court. (r.reuters.com/nud54v)
Suntech also said it would consider pursuing a Chapter 15
filing in the United States that would allow U.S. courts to
recognize a foreign bankruptcy as the main proceeding and block
creditors from seizing U.S. assets.
A group of Suntech creditors in the United States filed a
Chapter 7 involuntary bankruptcy petition against the company in
October. Suntech has said it will contest the attempt to wind up
In a Chapter 7 bankruptcy, a trustee is appointed to oversee
the sale of assets to raise money to repay creditors.
"The idea is to reach a deal through the Cayman proceedings
and (Suntech) would try to enforce that in the U.S. through a
Chapter 15 and use that to dismiss the involuntary bankruptcy,"
said Ken Coleman, a partner at law firm Allen & Overy LLP.
Coleman is not involved in the Suntech case.
Suntech's stock was trading around $86 nearly six years ago,
before the prolonged downturn in the solar industry.
Rapid capacity expansion by Chinese manufacturers from
around 2008 created a global glut of panels just as countries in
Europe, traditionally the largest solar market, withdrew
subsidies to consumers. The subsequent fall in prices forced
many producers to shutter production.
China's Shunfeng Photovoltaic International Ltd
agreed last week to buy Suntech's main manufacturing unit, Wuxi
Suntech, for $492 million, leaving Suntech with few assets.
Wuxi Suntech was dragged into bankruptcy proceedings by
Chinese creditors in March, days after Suntech defaulted on a
principal payment on $541 million of convertible bonds.
"Shunfeng is buying essentially all of Suntech's production
capacity and technology portfolio, apparently leaving the
U.S.-listed holding company a quasi-empty shell," Berney said.
After the sale of its main manufacturing unit, Suntech is
left with little more than its U.S. sales and distribution
business and an investment company that owns solar power plants
in Italy. Some of those plants are under investigation in Italy
for illegally availing state subsidies.
Suntech shares were down 16 percent at $1.26 in early
(Reporting by Swetha Gopinath and Tanya Agrawal in Bangalore;
Editing by Kirti Pandey and Ted Kerr)