LDK Solar emerges from bankruptcy

Beleaguered solar company LDK Solar – the China-headquartered manufacturer of ingots, wafers, modules and cells – has announced the closure this week of U.S. Chapters 15 and 11 bankruptcy proceedings at three of its U.S. subsidiaries.

Having fallen into financial difficulties at the beginning of 2014, the company was delisted from the New York Stock Exchange in April last year as its shares tumbled to sub-$1 levels following the imposition of U.S. trade sanctions imposed on Chinese solar components. As a result of straitened cash flow, the company defaulted on a $300 million bond.

By last summer, LDK’s liquidators announced that the company had amassed the funds required to exit insolvency, having arranged several agreements with its creditors to lower its repayment terms to more manageable levels.

This week’s announcement sees the company’s three U.S. subsidiaries – LDK Solar Systems, LDK Solar USA and LDK Solar Tech USA formally close bankruptcy proceedings. In November last year, all three filed for bankruptcy protection in Delaware amid a significantly deteriorating financial performance due to overcapacity in the solar cell market in the U.S.

The parent company, LDK Solar Co, remains in provisional liquidation, but has made good on its goal of restructuring its $700 million offshore debt and is now beginning to attract investors thanks to recent Chinese government backing of its solar industry.

LDK Solar still owes around $2 billion to Chinese banks, but this onshore debt is considered a workable problem, with a number of government-backed institutions – including the China Development Bank – willing to offer loans to the company.

"These loans to LDK show the government is supporting the company and the solar industry," said Guotai Junan Securities analyst Yang Kun. "It is unlikely that LDK will default on other borrowings in the future."