LDK and Suntech both look to Chapter 15 Bankruptcy protection from the US Courts

Even as the solar industry and companies are enjoying sunny times due to the large demand growth in 2014, the debt laden leaders of yesteryears are still going through their death throes. LDK Solar and Suntech used to be the largest companies in their respective solar manufacturing segments. However, these companies were rashly managed, with their CEOs taking on too much debt as they raced to expand ahead of their rivals. The massive debt proved to be a death knell for these companies, as the solar industry went through an excruciating downturn in the 2012 and 2013. These companies could not recover from the downturn as they reported hundreds of millions of dollars in losses in the last couple of years. Many of the other companies such as Solarworld and Q-Cell have also become bankrupt or quasi bankrupt in the interim. However, the survivors such as Sunpower, Trina, Yingli, Canadian Solar have seen their stock prices multiply as solar demand has skyrocketed on the back of super low prices of solar components. The whole world is seeing a massive solar boom as governments do their bit towards the climate change fight by giving some subsidies.

LDK and Suntech are however in a very bad state. Their creditors are fighting to get their investment back, as both have repeatedly defaulted on their payments. Their convoluted holding structure means that the legal cases become complex for them as they try to restructure. Suntech has already sold most of its assets to Shungfeng, while LDK Solar continues to peter along alone. Both have seen their stock prices languish in the penny scale, even as other solar stocks keep rising.

LDK is now threatening bondholders with liquidation if they extend the terms of forbearance. LDK Solar wants to go the Suntech way of Chapter 15 bankruptcy. However, some of the creditors do not want this option. Both have been going down messily with multiple management and ownership changes. It would be good for them to die peacefully as these companies have already suffered enough in my view.