SunPower files for Chapter 11 bankruptcy

October 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

October 2024 Issue

In the latest blow for the beleaguered solar industry, residential solar technology and energy services provider SunPower and certain of its subsidiaries has filed for Chapter 11 bankruptcy protection.

Concurrently with its bankruptcy filing, SunPower has entered into an asset purchase agreement (APA) with rival solar company Complete Solaria to serve as a stalking horse buyer for the assets associated with SunPower’s Blue Raven Solar business, new homes business and non-installing dealer network.

Under the terms of the APA, subject to court approval, Complete Solaria will acquire SunPower’s assets and assume certain related liabilities for $45m in cash. The Chapter 11 filing also provides other interested parties with the opportunity to submit competing bids for SunPower’s assets.

A leading solar, storage and energy services provider in North America, SunPower offers solar storage solutions designed and warranted by one company that gives customers control over electricity consumption and resiliency during power outages while providing cost savings to homeowners.

“The move to zero‑emission solar energy is accelerating, along with distributed solar power generation, as homeowners can now generate their own power, below the price of utility power in most states,” said T.J. Rodgers, chief executive of Complete Solaria. “This acquisition will strengthen our position in the market and put more muscle behind our commitment to driving the future of clean, reliable energy.”

According to SunPower’s Chapter 11 filing, it encountered an acute liquidity crisis following a steep drop in demand for residential solar and a series of erroneous financial reports that rendered the company unable to secure new financing.

“In light of the challenges SunPower has faced, the proposed transaction offers a significant opportunity for key parts of our business to continue our legacy under new ownership,” said Tom Werner, executive chairman of SunPower. “We are working to secure long-term solutions for the remaining areas of our business, while maintaining our focus on supporting our valued employees, customers, dealers, builders and partners.”

SunPower has asked the bankruptcy court for approval to complete the transaction by mid to late September 2024. In addition, the company intends to continue a sale process for its remaining assets and effectuate any resulting sale transactions pursuant to section 363 of the US Bankruptcy Code.

To fund business operations and administrative expenses during the Chapter 11 cases, as well as meet its obligations to its employees, SunPower has requested court approval to access the necessary prepetition cash collateral. Following expected approval, the company will seek an expeditious sale process and to liquidate any remaining assets and undergo an orderly and efficient winddown of its operations.

Serving as legal counsel to SunPower are Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., while Alvarez & Marsal North America, LLC is serving as transition officer and financial adviser. Moelis & Company is serving as investment banker and C Street Advisory Group is serving as strategic communications adviser. Serving as legal counsel to Complete Solaria is DLA Piper LLP (US) and Arnold & Porter Kaye Scholer LLP, with Ayna.AI LLC serving as adviser.

“For nearly 40 years, SunPower has made solar energy more accessible to Americans, driven by our mission to change the way our world is powered,” added Mr Werner. “We are confident that Complete Solaria will carry forward our vision to shape the future of residential solar as a pioneer in this space.”

Fraser Tennant