Suntech Power Holdings, which is a Chinese-owned company that is registered in the Cayman Islands, was placed in involuntary Chapter 7 bankruptcy after U.S. investors petitioned the southern district court of New York. The petition came as a result of unpaid convertible notes amounting to $1.6 million. The notes were due the end of 2013 and remained unpaid. This prompted the U.S. investors to file the bankruptcy petition.
However, recent negotiations with the note holders resulted in an announcement Friday that Suntech will be dismissing the Chapter 7 filing. Instead, they will be filing Chapter 15 bankruptcy in the company’s Caribbean base. This will allow the company to remain in business while proceeding with liquidation and restructuring as regulated in the U.S. bankruptcy code.
If Suntech does not file for Chapter 15 by the allotted time, which is Feb. 25, the agreement will be void. The Chapter 15 filing will result in recognition of the restructuring in the Cayman Islands to be entered into the U.S. Bankruptcy Court. The deadline for that recognition to be filed in the U.S. Bankruptcy Court is May 31, with a Dec. 31 approval date.
Bankruptcy attorneys in New York can tell you that Chapter 7 is not always a bad option for consumers who are too far in debt to be able to pay their bills and their everyday costs to survive. A Chapter 7 bankruptcy can often free up a consumer by liquidating or even writing off most or all of their debt, giving them a fresh start.
There are provisions in the bankruptcy code to allow most consumers to keep certain items that they might consider comfort items. For a business, however, a Chapter 7 bankruptcy will liquidate all assets, closing down the business. If a company wants to remain in business, a Chapter 15 can allow the business to continue to run while restructuring and liquidating some of its debt.
Source: PV Magazine, “Suntech signs agreement over noteholder lawsuit” Max Hall, Feb. 03, 2014by