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CHINESE COMPETITION,
LOST SUBSIDIES PUSH SOLAR
COMPANIES INTO BANKRUPTCY
IN THIS ISSUE
FEATURES
Chinese competition and lost subsidies are
pushing solar companies into bankruptcy.
Considerations for handling post-reorganization equity.
Patents provide value and challenges ...........2
NEWS IN BRIEF
Bankruptcy claims traded at the highest volume
in a year in July; Chapter 11 filings increased
in August; Tennenbaum raised $530M; New
Mexico put $200M into a PIMCO distressed
fund; Pennsylvanias school pension fund
placed $100M with Brigade Capital; Kansas
made a $30M commitment to a UBS real estate
fund; a New York power company may file for
bankruptcy; an Oregon publishers forbearance
expired; a Hawaiian hotel owner is in a fight
with Marriott; Iron Mining Group is in a dispute
with its bridge lender; Chinas ShengdaTech
hired a restructuring officer; Nutrition 21 plans
an asset sale; and hirings & firings ..................3
by Kirk ONeil
Increased competition from China-based
solar product manufacturers and a reduction
in state-sponsored subsidies for solar installation in Europe have broken the backs of
U.S. solar manufacturers, forcing several to
file for bankruptcy over the past month.
Distress in the U.S. solar industry is
expected to continue over the next couple
of years, even if demand increases, as lowcost Chinese solar manufacturing continues to expand and flood the U.S. market
with low-priced products, according to
bankruptcy attorneys and turnaround
management consultants.
The string of solar company bankruptcies began with Marlborough, Mass.based Evergreen Solars Chapter 11
filing on Aug. 15, followed by Hopewell
Junction, N.Y.-based SpectraWatt Inc.s
bankruptcy filing on Aug. 19 and culmi-
CHAPTER 11
FILINGS IN U.S.
1,300
1,200
1,100
1,000
900
800
S O N D J F M A M J J A
2010
2011
The ongoing financial crisis and related surge in bankruptcies has left
many distressed debt investors in the unfamiliar position of holding stock
or other forms of equity in reorganized debtors. Investors holding these
types of securities may seek to immediately monetize them through a secondary market sale. Alternatively, investors may find a company to be an
attractive investment after its reorganization, and look to increase their
holdings in its securities. Recently, an active market in post-reorganization
equity has developed, in shares of companies such as RDA Holding Co.,
Stallion Oilfield Holdings, Express Energy Services, Gateway Casinos
& Entertainment and Hayes Lemmerz International. This article will
discuss issues potential sellers and buyers of such securities should consider
Continued on page 8
For use by original recipient only. It is illegal to forward or otherwise distribute without permission.
Post-Reorganization
DDR
Continued from front page
when negotiating, documenting and settling their trades in the post-reorganization equity of reorganized debtors.
For use by original recipient only. It is illegal to forward or otherwise distribute without permission.
Post-Reorganization
DDR
for the buyers own account, for investment purposes, and not with a view
towards a resale or other distribution of
the securities. This cautious approach
serves to provide the seller comfort that
it would not be deemed to be acting as
an underwriter engaged in a distribution
of the securities. A buyer is also generally
asked to acknowledge to its seller that
the buyer understands the securities it is
purchasing have not been registered with
the SEC, and could be subject to other
restrictions on transferability as well
(such as those contained in a stockholders agreement).
In addition to memorializing the
terms and conditions of the trade on a
purchase and sale agreement, the parties to the transaction often will need
to execute additional documentation
and submit it to the issuer of the securities, its counsel or to third parties such
THE PIPEs
CONFERENCE 2011
Tips for
Settlement
November 1 2
New York Marriott Downtown
September 13 2011