On April 2, 2012, Solar Trust of America (“Solar Trust”) filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. As stated in the Declaration of Solar Trust’s CEO (the “Declaration” or “Decl.”), the company was started in 2005 by its corporate parent, Solar Millennium AG. Solar Millennium started Solar Trust intending to develop solar energy utility projects in the southwestern United States. In 2009, Solar Millennium created a joint venture company with Ferrostaal AG. This joint venture became the holding company for Solar Trust. Decl. at pgh. 7.
Solar Trust’s Operations
As a company in the developmental phase, Solar Trust does not currently have any operational solar facilities. Instead, the company has several projects that are at different stages of development. One of Solar Trust’s projects, the “Blythe Project,” is located on over 7,000 acres of public land in Riverside County, California. Once completed, the Blythe solar power plant is expected to be one of the largest solar power plants in the world. Decl. at pgh. 15.
Solar Trust entered into a grant of right of way with the U.S. Department of Interior, Bureau of Land Management, for the land used for the Blythe Project. Under this right of way agreement, Solar Trust pays the federal government approximately $2.3 million in rent annually. Solar Trust also entered into a Large Generator Interconnection Agreement (“LGIA”) with various California utilities. The LGIA will permit Solar Trust to connect to California’s power distribution network. According to Solar Trust, its energy transmission rights under the LGIA are a highly valuable asset due to proposed network upgrades related to the Blythe Project. Decl. at pgh. 15.
Events Leading to Bankruptcy
Given that Solar Trust is in developmental stages, it does not produce operational revenues and instead depends on funding from its corporate parents. The company’s parent companies finance the costs of project development and other related expenses. In December of last year, however, one of Solar Trust’s parent companies, Solar Millennium AG, began insolvency proceedings in Germany. Once the insolvency proceedings began, Solar Millennium AG came under the control of a German insolvency administrator and thereafter stopped funding for Solar Trust. Decl. at pgh. 20.
Although Solar Trust originally tried to pursue an out of court sale of assets, such a sale became impossible due to the company’s lack of cash and pending debt obligations. On April 1st, Solar Trust’s rental payments came due for the right of way agreement for the Blythe Project. The April 1st payment was the second of two payments that were due under the agreement. The first rental payment was deferred to April 1st. Aside from the rental payments, several other obligations are also coming due. Decl. at pghs. 23-25.
Objectives in Bankruptcy
In the run up to bankruptcy, Solar Trust reached an agreement with NextEra Energy Resources to provide postpetition financing. NextEra has also expressed an interest in serving as a stalking horse purchaser of some of Solar Trust’s assets. Using the funding provided by NextEra, Solar Trust intends to market its assets and proceed with a bankruptcy auction under section 363 of the Bankruptcy Code. Decl. at pgh. 28.
The Solar Trust bankruptcy is before the Honorable Kevin Gross. Judge Gross is the Chief Judge of the Delaware Bankruptcy Court. Solar Trust is represented by the law firm Young Conaway Stargatt & Taylor.