Thursday, September 12, 2013

Suntech Bondholders Win Motion for Summary Judgment ($STP)


"Suntech Power Holdings Co. (STP) noteholders won a court ruling on their claim for $550,000 in defaulted debt owed by the Chinese solar-cell maker, a lawyer for the investors said.

U.S. District Judge Robert Patterson Jr. granted the investors’ motion for summary judgment today at a hearing in Manhattan, Jay Teitelbaum, a lawyer for Trondheim Capital Partners LP and Michael Meixler, said in a phone interview."


Anonymous said...

Suntech is now in a box.

Maybe it was inevitable, or maybe they underestimated these small bondholders, but the walls have closed in on them.

For starters, the only way to stay U.S. litigation and post-judgment collections would be a Chapter 7, 11, or 15 petition filed in a U.S. bankruptcy court. Caymans mumbo jumbo would not have any effect on U.S. lawsuits.

A Caymans scheme and Chapter 15 petition would result in a stay, but only after a waiting period:

"A foreign representative must obtain recognition of the foreign proceeding in order to obtain the rights and benefits of Chapter 15, including protecting the foreign debtor’s United States assets from creditor action and obtaining access to and relief from the United States courts on most matters.

[U]pon the filing of a Chapter 15 petition, certain parties are notified of the Chapter 15 filing and the relief sought in the case (more on 'notice' appears below). The bankruptcy court will typically hold a hearing within 30 days of the Chapter 15 filing to determine whether the foreign proceeding should be recognized as a 'foreign main' or 'foreign non-main' proceeding. This hearing is usually referred to as the 'recognition hearing.'

During the time period between the filing of the Chapter 15 petition and the recognition hearing — frequently referred to as the 'Chapter 15 gap period' — the foreign debtor is not protected by any provisions of the Bankruptcy Code, such as the automatic stay. Thus, absent the intervention of the bankruptcy court, creditors are able to take action against the foreign debtor’s United States assets..."

Further, a Chapter 15 proceeding would not allow the estate to avoid the payment to the judgment creditors of any assets that had been collected:

"Chapter 15 debtors simply do not have the authority to bring preference and most other avoidance actions, such as fraudulent transfer claims. The Bankruptcy Code specifically prohibits a Chapter 15 debtor from commencing most types of avoidance actions... a Chapter 15 debtor cannot sue on any preference or fraudulent transfer claim under either United States law or foreign law, unless a Chapter 7 or 11 bankruptcy proceeding is instituted." (ibid)

Anonymous said...

Suntech Holdings may still have some time to enter into a Scheme of Arrangements but may need to do a Provisional Liquidation.

US lienholders would be able to enforce liens under Cayman law and quickly force Suntech into a Compulsory Liquidation by presenting a winding-up petition.

Here is a basic overview of Cayman Insolvency laws and legal procedures:

? said...

New CEO as the old CEO David King steps down?

Why would he step down now?

Anonymous said...

A company is deemed unable to pay its debts where any of the following apply:
It neglects to pay (or fails to secure the debt, or come to an arrangement, to the creditor's satisfaction) for more than three weeks a sum in excess of CI$100 for which a demand has been made and served on it.

An execution or other process issued in the form of a judgment, decree or order by the court in favour of any creditor is returned unsatisfied in whole or in part.

It is proved to the satisfaction of the court that the company is unable to pay its debts.

If the debt claimed in the demand is disputed by the company in good faith and on substantial grounds then it cannot form the basis of a winding-up petition. It is not necessary for the debt claimed to be a judgment debt. However, if it is a judgment debt then the company cannot legitimately dispute it, unless execution of the judgment has been stayed by the court.

Anonymous said...


While it seems more likely that BK will come, can the filing now be delayed? How will this judgment effect the debt/equity swap? As of now the common is flying on heavy volume at 1.30 on what I can only rationally assume is short covering?


Anonymous said...

How many people are left on the board?

Seems like all the compnay will just go dark and continue to trade on the NYSE

Anonymous said...

If they don't put up a fight, the dissenting bondholders will be able to have the company liquidated.

Anonymous said...

There is nothing in the US to be liquidated and good luck getting anything out of China.

Seems like the same end result as the Chinese reverse mergers of a few years ago.

Obviously the company should enter some type of BK proceedings but everyone is jumping ship and the only people left are those in China who don't care about US/Cayman law.

Anonymous said...

PRC banks can push Wuxi Suntech subsidiary into bankruptcy next week.

It does not seem like the PRC banks are going along with the Scheme of Arrangement that was proposed by creditors.

Wuxi administrators and banks are probably negotiating an asset disposal timetable.

PRC banks likely demanding one or some of the following:
I) Immediate asset sales to Wuxi Goalan
II) Asset disposal timetable
III) New debt agreement

Wuxi and creditors don't really have a choice but to do what prc banks want.

Anonymous said...

The creditors wanted a handout, even though they are invested in a subordinated security and deserve nothing.

The Asian way is to string them along and keep saying "verrry difficult" instead of directly telling them to pound sand.

Anonymous said...

What is the company going to do when the lawsuit winners start going after this company like some guy who didn't pay his bills?

Do they really want to go to a judgment debtor exam and air their dirty laundry? Or have the former board members get subpoenaed to talk about what is going on?

Anonymous said...

They don't care about US or Cayman law.

They are in China and likely told by the government to just go dark as foreign investors can't get anything that is in China.

They don't havev anything of value outside China and don't care one bit about foreign investors.

Anonymous said...

STP will issue a press release with an update on the Wuxi Suntech bankruptcy situation; if it is not liquidated, and all parties are able to reach a restructuring agreement, then STP will detail these specifics as well.

Even if STP were to go in the dark, it has to refile financials as well as a 2012 annual by mid-October or else NYSE will surely de-list it.

STP is presenting senior mgmt resignations as if they are successfully turning around the company.

The longer STP stays in the dark while negatives facts get reported by media sources, the more I wish Zhengrong Shi didn't beneficially own 30.2% through trusts so more shares were available to short STP.

Anonymous said...

The restructuring plan is total bullshit!

Anonymous said...

What's probably going to happen is that the company will churn out more bullshit releases about a "framework" that the Chinese creditors have no interest in.

Until the lawsuit winners put this thing out of its misery with an involuntary Chapter 7 filing. Then the United States trustee can take a look around for anything that's left to be distributed to bondholders.

By the way, who is the company going to send to the examination by creditors conducted by the US trustee?

Anonymous said...

How long will a involuntary Chapter 7 filing take?

Anonymous said...

Unlike a voluntary bankruptcy filing, when an involuntary bankruptcy petition is filed, a company is not immediately placed into bankruptcy and the company may continue to operate its business and use, acquire, or dispose of its property as if an involuntary bankruptcy case had not been filed.
Instead, an involuntary bankruptcy petition functions more like a complaint asking the court to declare that the company should be put into bankruptcy. Like a complaint, the involuntary petition must be served together with a summons.
Although the bankruptcy court has the authority to appoint an interim trustee or order other restrictions on the company, those do not automatically apply, have to be sought by motion, and may be denied by the bankruptcy court.
The company can consent to the involuntary bankruptcy filing. When an involuntary Chapter 7 filing is made, the company can also respond with its own voluntary Chapter 11 filing and take control over the case as a debtor in possession.
To contest an involuntary petition, the company must do so within the time allotted by the Federal Rules of Bankruptcy Procedure, currently 21 days after service of the summons. Typically that involves filing an answer or a motion to dismiss.
Litigation over whether the requirements discussed above have been met, and thus whether the company should be put in bankruptcy, can involve various pleadings, document and deposition discovery, status conferences, motions for summary judgment, and/or an evidentiary hearing or trial.
If the bankruptcy court ultimately rules in favor of the petitioning creditors, an "order for relief" is entered and the company is officially placed into bankruptcy. At that point, the company is subject to the Bankruptcy Code's provisions and supervision by the bankruptcy court.

Anonymous said...

FYI: the Securities Daily newspaper is reporting (tomorrow 9/17):
1) Yingli and Suntech have launched high-level contact, and
2) Suntech will announce a bankruptcy reorganization plan this week.

It seems like STP will need to sell a lot of assets to stay on life support.

Anonymous said...

If Suntech can't sell enough assets, then the life support plug will be pulled.

Also, even if Suntech remains in critical condition, a deal Yingli would mean puts will ultimately get adjusted very close to their strike price.

Anonymous said...

" a deal Yingli would mean puts will ultimately get adjusted very close to their strike price. "

What do you mean?

How much money could they get for these assets? Not nearly enough to pay off the Chinese debt, right? Would this mean a three month extension?


Anonymous said...

This dead horse is beat.

Maybe it will take a US Marshal showing up at the Suntech HQ in San Francisco with a Writ of Execution for them to get the message.

Anonymous said...


"Hello you have reached Suntech America"

Phone number hasn't been disconnected yet.

Anonymous said...

Thursday and Friday are national Chinese holidays, so Wuxi Suntech will no longer exist unless it can get an extension in court today or tomorrow.

September puts look like they will get a great return.

Look at the share price when STP announced Wuxi Suntech bankruptcy and imagine what it will be like when headlines read "Suntech gets liquidated!"

Anonymous said...

Any reason for a bid in the bonds the past week?

Anonymous said...

What's the bid price on the bonds now?

Anonymous said...

Low 20s. It hasn't increased at all.

Anonymous said...

Why would Trina or Yingli ever bid for Wuxi Suntech assets today when they could get a better price from Chinese banks next week?

Anonymous said...

Chinese court will probably liquidate the Wuxi subsidiary.

US bankruptcy court will probably liquidate rest of world assets after an involuntary chapter 7 petition is filed.

Anonymous said...

Right, the only way Wuxi Suntech can avoid a liquidation is if it either raises enough money through asset sales or gets merged into another company by the time NYSE opens tomorrow morning.

What will happen to the ADR if chapter 7 is filed in the US? Will STP get halted or delisted?

John said...

Looks like suntech looking to extend to December?

? said...

Any legitimacy to the story?

Says nothing about the PRC banks, just that they requested a three month extension.

Getting down to crunch time..

Anonymous said...

Read the PRC Enterprise Bankruptcy Laws...

Wuxi Suntech's administrator will either need to file for Bankrupt Liquidation or submit a Rectification Plan and GET IT APPROVED TODAY, or else it will automatically get liquidated.

A Rectification Plan is basically the same thing as an orderly liquidation, as it will contain: a full repayment schedule of the bank loans, and a timetable for implementing the plan and supervising it's performance, among many other details.

Creditors can block the Rectification Plan (if they favor an immediate liquidation), and 2/3 will need to approve the draft or a modified/amended/new version of one in <1 month; if one is not approved, then there will be a forced liquidation.

Keep in mind that the banks hold $1.75 billion in secured bank notes, and are in charge as this rank well above amounts owed to 2) employees, 3) taxes due, and, lastly, 4) common creditors (such as the bondholders and shareholders).

Anonymous said...

when will this info be reflected in the stock price?? my guess...never.

Anonymous said...

Suntech doesn't get until December.

The minority bondholders have to be worried about assets dissipating from the estate. They can pull the plug (chapter 7 involuntary) at any time now.

I would assume they will take the depositions of current and former Suntech employees, so that they have some meaty revelations to put in their motion for appointment of a trustee.

Anonymous said...

9:30 PM, No news out of Wuxi?

Anonymous said...

"A bankruptcy manager from the Wuxi City Intermediate People's Court requested a postponement of the submission of a restructuring project from late September to around Dec. 20, the paper said."

Anonymous said...

Well, that settles it. This will be liquidated in US Bankruptcy court.

Anonymous said...

Was the request to postponed accepted?

Anonymous said...

We should find out about the Wuxi situation over the weekend.

If Suntech does not issue a PR by Sunday evening US time, then it will likely be reported by Chinese press Monday morning China time.

Does any who is reading this know anybody in Wuxi who can find out?

Anonymous said...

Company has been very quiet... If they had an "understanding" in place, very likely we would have heard it by now..

Anonymous said...

It's all fun and games until Patterson's WWII buddy gets appointed receiver and auctions off Shi's saki collection.

Anonymous said...

Ok, but what does that do to the ADR?

Anonymous said...

No news from STP

Looks like we need to hear from the media

Anonymous said...

No news from Wuxi either..

Interesting PR from the company this morning. No mention of the restructuring agreement.

3 weeks later.. No restructuring framework or liquidation details.

Anonymous said...

Can't Trondheim seize the banks accounts that are used to pay rent and salaries to Suntech America employees in San Francisco?

Without bankruptcy protection, everything is fair game, right?