China's Suntech Power Holdings Co Ltd STP.N, 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 the company.
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 (1165.HK) 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 afternoon trading.
(Reporting by Swetha Gopinath and Tanya Agrawal in Bangalore; Editing by Kirti Pandey and Ted Kerr)