Financially strapped Suntech Power Holdings Co., Ltd. has filed an application for a provisional liquidation in the Cayman Islands, the jurisdiction of its incorporation.
The company, whose main assets are being bought by fellow Chinese solar manufacturer Jiangsu Shunfeng, said on Wednesday that by commencing such proceeding in the Cayman Islands, it would "have the benefit of protection and additional time to complete negotiations and conclude the restructuring in the best interests of all stakeholders."
Suntech’s core business, Wuxi Suntech Power Co., Ltd, filed for insolvency in March after defaulting on $541 million of convertible U.S. bonds.
Shunfeng agreed last week to buy Suntech’s main manufacturing unit, Wuxi Suntech, for $492 million. The deal would provide Shunfeng with two manufacturing facilities in the Chinese city of Wuxi with some 3.6 GW of annual cell and module production capacity.
Suntech added that it would consider pursuing a Chapter 15 filing in the United States following the grant of the application in the Cayman Islands to obtain similar protections in the United States. Chapter 15 of the U.S. Bankruptcy Code allows U.S. courts to recognize a foreign bankruptcy and offer protection from creditors possibly seizing a company’s U.S. assets.
However, with the sale of its main manufacturing assets to Shunfeng, Suntech would be left an all but empty holding, say industry watchers.