On October 17, 2012, Satcon Technology Corporation and various of its subsidiaries (collectively, "Satcon") filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Satcon’s subsidiaries include Satcon Power Systems, Inc., Satcon Electronics, Inc., Satcon Power Systems, LLC, Satcon International and Satcon Technology. As stated in Satcon’s Declaration filed with the Delaware Bankruptcy Court (the "Decl."), Satcon provides "utility-grade power conversion solutions for the renewable energy market." Decl. at *2. More specifically, the company designs and produces power conversion equipment that allows renewable energy producers to connect to electric grids. Id.
Satcon is one of many alternative energy companies that have filed for bankruptcy in Delaware in the last two years. The company attributes its bankruptcy, in part, to the elimination by European governments of solar power subsidies. In North America and Asia, Satcon has been forced to deal with greater competition and a drop in prices. Decl. at *3. In 2012, for example, Satcon’s Powergate inverters used by utilities fell from its 2010 price of $.25 to $.15. Decl. at *4. Even though the company saw a substantial increase in the amount of products shipped from 2009 to 2011, revenue growth was far less substantial. Decl. at *3.
Formed in 1992, Satcon is a Delaware corporation headquartered in Boston, Massachusetts. Decl. at *5. Originally, the company focused on the design and manufacture of electrical power conversion for specialized markets such as hybrid electric vehicles and semiconductors. Id. In 1999, however, Satcon purchased Interpower Corporation, a Canadian company that sold power inverters used in renewable energy projects. Decl. at *6. Satcon’s inverters take a direct current produced by a utility source and converts it into an alternating current capable of being used in an electric grid. Id. Typical customers include developers of large-scale solar farms. Decl. at *7.
From 2009 to 2011, Satcon watched its sales for power conversion products grow from $52 million to $188 million. However, during this same period, the price of its products dropped considerably. Decl. at *16. In response to the drop in prices, the company began to reduce costs by closing its Canadian manufacturing facility and outsourcing production to contract manufacturers. Id. Under this approach, Satcon cut its workforce from 500 to approximately 100 as of October of 2012. Id. By June of 2012, Satcon was able to reduce its secured debt, trade debt and other expenses from $157 million to $72 million. Decl. at *17. By reducing its debt, Satcon also reduced its cash on hand. With limited liquidity, the company began experiencing problems trying to pay its vendors and lenders. Id. Once the company determined that it could not reach a restructuring agreement with its lenders, Satcon decided to file for bankruptcy and restructure its debt and operations under the protection of the Bankruptcy Code. Decl. at *19.
The Satcon bankruptcy is before the Honorable Kevin Gross. Judge Gross is the Chief Judge of the Delaware Bankruptcy Court. Satcon is represented by Dennis Meloro of Greenberg Traurig LLP. A copy of Satcon’s Declaration in Support of Bankruptcy Petitions is available here for review. A copy of Satcon’s Bankruptcy Petition is available here.
Jason Cornell is a partner with the law firm Fox Rothschild LLP. Jason is a creditors’ rights attorney who is admitted and practices before the United States Bankruptcy Court for the District of Delaware. You can reach Jason at 302 427 5512 or email@example.com.