Sungevity committee financing objection decries ‘loan-to-own strategy’

By Caroline Salls

Pittsburgh, April 3 – Sungevity, Inc.’s official committee of unsecured creditors said the company’s proposed debtor-in-possession financing terms “provide the DIP lender/stalking horse with too much and the estates and their stakeholders with too little,” according to an objection filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the Sungevity debtors had a tentative $350 million sale agreement in place six months ago, but, absent the emergence of another bidder in the 28 days between the company’s bankruptcy filing and the April 10 bid deadline, will be selling substantially all of their assets for a less than $50 million credit bid and the assumption of liabilities.

Under the proposed DIP financing motion, the committee said the lender/stalking horse bidder, “seeks to use the Chapter 11 process to implement its loan-to-own strategy with no benefit to the estate or its creditors.”

If the DIP lender and pre-bankruptcy secured parties are allowed to absorb unencumbered assets, the committee said their collateral should be charged for the costs and expenses related to that process, and those charges should benefit unsecured creditors.

Based in Oakland, Calif., Sungevity is a technology-driven solar energy company, which enables users to get a quote without a site visit. It services 13 U.S. states as well as the Netherlands, Germany and the United Kingdom. The company filed bankruptcy on March 13 under Chapter 11 case number 17-10561.

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