California Solar Projects Could Power Up After Bankruptcy Case

May 17, 2012

California Solar Projects Could Power Up After Bankruptcy Case

It is often remarked that bankruptcy offers a fresh start for individuals and businesses experiencing financial difficulties. Chapter 11 bankruptcy protection, for instance, can provide indebted businesses the opportunity to restructure or reorganize with the help of a plan for future financing and profitable operation of the company. A California company's recent bankruptcy case showcases how the process works and how it gives hope that the company's projects will survive.

Chapter 11 Bankruptcy Protection

Oakland, California-based Solar Trust of America, LLC has several solar energy projects in development, notably a 1,000 MW solar-thermal plant in California. In April, Solar Trust and its affiliates filed for Chapter 11 bankruptcy. The next day, the company asked the bankruptcy court to approve $3.9 million in interim financing from the largest renewable energy operator in the U.S., according to Bloomberg. That number has grown to a total of over $43 million in various forms of financing from the same company, NextEra Energy Resources, LLC.

The increasing amount of funding being offered to Solar Trust during its bankruptcy proceedings is a display of the opportunities that can arise after filing for bankruptcy. It is possible that NextEra's next offer could be to purchase Solar Trust's assets as part of the bankruptcy plan. Once a sale goes through, the California power plant project could come back online.

Debt Relief Through Bankruptcy

In other bankruptcy cases, a sale of assets is not always necessary. Instead, the debtor can agree to pay creditors, in many cases for less money than what was originally owed. In exchange, the bankruptcy court can discharge or modify certain debts that existed previous to the bankruptcy filing, and the company can continue to operate. Importantly, reorganization plans must be approved by the court after successfully arriving at repayment agreements with creditors.

When companies or individuals struggle to meet mounting debt obligations, they should contact a skilled and experienced bankruptcy attorney who can advise them on whether they have options for seeking debt relief in bankruptcy.

Article provided by The Lobel Firm, L.L.P.
Visit us at http://www.thelobelfirm.com