Two months after Sungevity’s “reverse merger” and plans to go public failed, the residential solar installer has filed for chapter 11 bankruptcy. As part of the company’s restructuring Sungevity has entered into an agreement under which Northern Pacific Group will acquire all of the company’s assets, including equity interests in the European operations, pending an auction of company.
Sungevity expects to complete the auction and sales process by the end of April. And while the company says that its operations will continue uninterrupted during the bankruptcy proceedings, Sungevity’s statement on its bankruptcy comes four days after employees say they were laid off without notice or severance. The company did not respond to pv magazine requests for information, however the Kansas City Star reported 400 layoffs in California and Missouri.
This comes only two years after Sungevity opened its office in Kansas City, Missouri. A former employee estimates that there are only 150 employees left in the company from a high of 1,200.
Sungevity notes that it has been able to raise $20 million to fund its operations during the bankruptcy and sale process, however use of these funds is subject to court approval.
“The actions we have announced today will allow Sungevity to emerge as a stronger and more competitive company,” stated Sungevity CEO Andrew Birch. “With its market-leading software platform and its high quality employees who provide unwavering commitment to customers and exceptional service, Sungevity intends to be at the forefront of the industry as solar continues on its growth trajectory in the years ahead.”
The bankruptcy filing comes as a former employee revealed to pv magazine that Sungevity was in talks towards a sale of the company’s European business to IKEA. This employee notes that while sales personnel were laid off, the company’s software team was largely intact, which would be important for IKEA to be able to provide in-store quotes on the spot to customers in target markets in Germany and Italy.
GTM Research had listed Sungevity as the United States’ fifth largest residential solar installer in 2016. The company had long touted its asset-light approach, with virtual site assessments that did not require a truck roll and partnerships with installers instead of an in-house team.
However, unlike the leading three installers – SolarCity, Sunrun and Vivint – Sungevity had remained a private company, without access to public market financing. The reverse merger with Easterly would have given it $600 million in capitalization, but since that fell through the company’s fortunes have taken a turn for the worse.
And even for the largest installers, the residential business has not been easy. SolarCity was acquired by Tesla last fall after reporting massive losses for several quarters, and Vivint has struggled to regain its footing and access financing in the wake of a failed acquisition by SunEdison.