Following mounting speculation, Suntech has finally confirmed today that a group of eight Chinese banks filed a petition for insolvency and restructuring against Wuxi Suntech on March 18, after the company defaulted on a US$541 million bond last Friday.
In a statement released today, Suntech said its photovoltaic cell and module manufacturing subsidiary has not objected to the petition. It now expects the Wuxi Municipal Intermediate People's Court in Jiangsu Province, China, to either accept or decline it in the coming days.
If the petition is accepted, a restructuring plan for Wuxi Suntech and its creditors will be formulated, most likely with the help of administrators. "Wuxi Suntech will apply to the Court to continue operations under the supervision of the administrators," said Suntech in the statement.
Speaking to pv magazine at this year's PV Project Implementation Conference China on March 18, Alex Zhu, Senior Director, Global Product Management, at Suntech, candidly described bankruptcy as "a good thing" for Suntech.
He predicts that the Suntech situation will be settled within one month and that a bankruptcy would provide the needed restructuring for the manufacturer to emerge as a leaner more competitive player in the industry.
Neither parent company, Suntech Power Holdings Co., Ltd nor its other principal operating subsidiaries are said to have filed for insolvency. The statement continued, "The Company has additional cell and module production facilities at wholly owned or partially owned subsidiaries in Wuxi, Shanghai and Luoyang and, in the event insolvency and restructuring of Wuxi Suntech is approved by the Court, the Company intends to continue production of solar products to meet customer orders.
"In addition, management will work with any Court-appointed administrators to ensure all of Suntech's product warranty obligations are met."
It is widely believed that the Wuxi Government will step in to save Suntech. According to a representative from Chinas Wuxi Municipal Government, who spoke to pv magazine in January, and correlating with various global media reports, the local government is prepared to take Suntech over, either wholly or partially.
Backing this up, a Chinese module manufacturing insider and former industry analyst further told pv magazine last week that he sees the Wuxi government stepping in, in order to prevent significant job losses and to retain the production capacity it has helped establish in Wuxi. As such, he does not expect production capacity will disappear, even in a bankruptcy scenario.
Amid these rumors, Suntech also announced today the appointment of Weiping Zhou, former chairman of Guolian Futures Co., Ltd and finance department manager of government-owned investment company Wuxi Guolian Development (Group) Co., Ltd, executive director and company president.
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