SOLAR

Suniva started a trade war. Now it's being auctioned off

Suniva Inc. is a Georgia solar manufacturer that persuaded the Trump administration to impose sprawling tariffs on imports, causing one of the biggest brawls in the history of the U.S. solar industry.

Now, almost exactly a year after the dispute started, a bankruptcy court ruled there's no plan to save Suniva and yesterday set a date for its assets to be sold.

The company's fate is still unclear, and it's possible that a buyer or some legal maneuvering could save it. But the fact that it won its long-shot quest for tariffs and still couldn't find a buyer has drawn sharp words from the solar industry.

"It was pretty clear from the start that Suniva's only function was to drag some additional value out of the trade case. While they succeeded in harming the solar industry by bringing the trade case, they did nothing to help themselves," said Dan Whitten, a spokesman for the Solar Energy Industries Association (SEIA), which led the opposition.

The controversy around Suniva had to do with jobs.

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Last April, Suniva dusted off a little-used law, Section 201 of the Trade Act of 1974, and asked the Trump administration to impose tariffs on solar imports around the globe. The company had gone into bankruptcy a month earlier and claimed that only trade walls could save jobs in a manufacturing industry that was born in the U.S. but had been nearly wiped out by competition from inexpensive Chinese imports.

The balance of the solar industry fought the proposal fiercely, warning that raising prices on those imports would cause steep job losses in the 260,000-person solar industry, which is mostly made up of project managers and installers.

So far, no one's greatest hopes or worst nightmares are coming true.

The tariffs that President Trump announced in January — a 30 percent tariff that declines every year and 2.5 gigawatts of solar cells imported without penalty — were less stringent than Suniva asked for. Meanwhile, the solar industry has seen a wave of canceled projects but so far not the 88,000-person drop in employment that SEIA feared.

Solar loser

An irony is that the goal of Suniva's request — stimulating U.S. solar manufacturing — is showing signs of success, but not for Suniva.

In March, Chinese solar giant JinkoSolar announced that it would spend $50 million on its plan to construct a large plant in Jacksonville, Fla., in order to avoid the tariffs.

Last month, the largest solar company in the U.S., SunPower Corp., announced it would acquire SolarWorld Americas, which is another beleaguered manufacturer that joined forces with Suniva to pursue the tariffs. Last week, a third U.S. solar manufacturer, First Solar Inc., announced it would open a new plant in Ohio, partly because its thin-film solar product isn't affected by the new tariff.

The fate of Suniva began to clarify in late March, when its biggest creditor, a New York financial firm called SQN Capital Management, asked a Delaware bankruptcy court to allow it to sell assets it held as collateral on $57 million in loans.

"There is no possibility of a successful reorganization within a reasonable amount of time," the company said in a court brief, adding that Suniva had missed deadlines to present a plan that would allow it to emerge from Chapter 11 bankruptcy. This form of bankruptcy holds off creditors while a company seeks a workable business plan.

On April 17, the judge gave the green light for SQN to auction off assets at Suniva's plants in Saginaw, Mich., and in Norcross, Ga., a suburb of Atlanta.

The assets controlled by SQN are almost all the contents of Suniva's factories, including printers, diffusers, ovens, laminators and conveyors. As important, SQN controls Suniva's trademarks and patents.

Yesterday, the court granted the same right to Wanxiang America Corp., a Chinese-owned firm that holds other assets. Now SQN's and Wanxiang's auctions will be held simultaneously, as soon as May 24.

Normally, granting these kinds of auctions means "a quick trip to a Chapter 7," said Joel Glucksman, a veteran bankruptcy attorney in New Jersey. Chapter 7 is the part of the bankruptcy code that dissolves a company.

Endgame

But Suniva's creditors may have something else in mind.

If an auction is held and no one makes a reasonable offer, SQN and other creditors could buy the assets themselves and then own Suniva outright, without the bankruptcy obligations.

An agreement approved by the court budgets almost $2 million to keep Suniva operating and allows SQN and another major creditor, Lion Point Capital, to continue to seek access to a pot of federal funds, made up of tariffs collected from prior Chinese solar imports. It also permits them to keep paying leases on Suniva's properties through July and to be first in line to take over those leases if they become available.

"Just because Suniva is selling the equipment doesn't mean it's selling the company or the company is disappearing," said one source familiar with the legal proceedings.

Twitter: @DavidFerris Email: dferris@eenews.net

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