Below is our initial take on recent bankruptcy-related developments:
Privately owned provider of residential solar panels Lumio filed for Chapter 11 bankruptcy on Tuesday in Delaware with plans to sell its company to its main lender, White Oak Global Advisors LLC.
The personalized renewable energy company has a stalking horse bid from an affiliate of White Oak Global Advisors, its primary senior secured lender, for roughly $100 million in a credit bid. Lumio aims to complete the sale within two months and will continue its operations without disruption during this period.
S&K Take: Lumio marks (at least) the third solar company filing in the past few months, joining iSun, Inc. and SunPower. The market, particularly for residential solar has taken a beating due to higher interest rates, which pushes down the demand for residential solar installation, as most homeowners finance the transaction. White Oak, a prepetition lender, has advances a stalking horse bid for the company of $100 million, which is comprised of an $8 million DIP and approximately $92 million of prepetition debt. The plan, according to White Oak, is to provide some equity to employees if it is the successful bidder. Maybe a discrimination/sub rosa plan problem in there somewhere, although that remains to be seen.
The financial regulator is reserving the right to challenge FTX's proposal to repay creditors in stablecoins. FTX, which filed for Chapter 11 bankruptcy in Nov. 2022 with an $8-billion deficit, has since discovered a stash of digital assets that could repay creditors with claims of $50,000 or less up to 118% of their claims.
S&K Take: This looks like a shot across the bow from the SEC here. They are bristling at the suggestion that the FTX debtors may seek to distribute stablecoins to creditors rather than cash. A cash distribution may have tax implications for customers, whereas a stablecoin distribution may avoid that issue. A savvy customer might consider selling their claim in the secondary market (which still seems to be frothy) where a counterparty might pay in stablecoins. In any case, this issue is not ripe at this point, as we are still waiting on precise distribution mechanics.
In 2023, Sorrento Therapeutics faced a financial and legal crisis that necessitated bankruptcy filing. The company's CEO and CFO convened a meeting with a team of advisors who recommended filing in Houston. However, Elizabeth Czerepak, the CFO at the time, expressed confusion over the decision, noting that Sorrento had no business operations in Texas.
S&K Take: Sharing this article as an interesting piece, although I would refrain from opining on it in depth. The title does seem a bit “sensational”, but we will leave it at that. Bigger picture, there is reason for concern around the potential public mistrust of the bankruptcy process that is building as a result of the drama in Texas.
