Christopher Seagon, the insolvency administrator of SiC Processing GmbH, based in Hirschau, Germany, and its Chinese subsidiary, SiC Processing in Baoding, has said he intends to enforce contractual compensation claims for short deliveries against Yingli and several of its subsidiaries.
Overall, Seagon says Yingli owes Sic approximately 23 million ($31.65 million) and stresses that the outstanding debt is a major reason behind SiC’s financial troubles and the company’s insolvency in Germany. SiC filed for insolvency in December.
"It’s incredible that a Chinese company of this size which is being considered by the Chinese government as a key supplier in its plans to construct 35 GW of solar energy by 2015 has not paid its suppliers, forcing them to shut down their operations, while also undercutting European photovoltaic manufacturers in price and threatening their existence in the process."
SiC claims Yingli owes it about 5 million from unfulfilled deliveries and services that have not been paid, despite repeated requests from Seagon, in more than 300 days. A further 18 million stems from breach of contract, according to Seagon.
If the debt remains unpaid, SiCs Chinese subsidiary will have to cease operations and lay off 180 employees, according to the company.
For its part, Yingli has made counter claims of its own against SiC, saying in a statement that it has been working with SiC to try to amicably settle the disputes between the two sides, and has fully performed its obligations that were not subject to disputes."
Yingli added that it paid all amounts — "with regard to payment of processing fees and damages alleged by SiC in the news" — prior to September 30, 2013.
Yingli also claims SiC owes it outstanding payments. "As SiC also owes to Yingli rents and utility bills and both parties remained divided over the determination of the residual payments, Yingli suggests that both parties further communicate and work to solve the issue."
Regarding SiCs claim of damages for insufficient deliveries, Yingli said it held "that these claims were not based on the full statement of facts, as SiC ignored the facts that the parties had inked several supplementary agreements to amend the minimum quantities and pricing terms."
Yingli added: "SiC has not been able to supply to Yingli qualified fresh slurry in accordance with the relevant supply contracts in the past, which in turn resulted in loss and damages to Yingli. Yingli reserves all rights to claim damages against SiC."
The Chinese giant also took aim at Seagon’s claim that Yingli was partly responsible for its bankruptcy.
"The insolvency of SiC is in virtue of its management and operation, which cannot be linked to Yingli. The fact that SiC is in insolvency proceedings has caused great concerns to Yingli on SiC’s ongoing ability to perform its obligations under the relevant supply agreements."
SiC’s long-term contract with Yingli had served as the basis for the German supplier to significantly invest in China, Seagon said. It was against this background that the company built its factory in Baoding. SiC currently owes bondholders in Germany, who provided the capital investment for its operations in China, some 87 million.
Yingli has faced a number of legal threats in recent weeks, including one from bankrupt U.S. thin film company Solyndra, which accuses Yingli and other Chinese firms of antitrust violations and unfair trade practices in a $1.5 billion lawsuit. It is also facing a similar lawsuit from Energy Conversion Devices.
Yingli executives have dismissed the lawsuits as "baseless claims," arguing that the bankrupt companies appear to be blaming others for their own failed enterprises.