Inverter Maker Satcon Files for Chapter 11 Bankruptcy

Renewable Energy World Editors
October 17, 2012 | 5 Comments

In yet another sign of the struggles that solar power manufactures are facing, today utility-scale inverter maker Satcon announced that it has filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. The petitions were filed in the U.S. Bankruptcy Court for the District of Delaware.

Steve Rhoades, Satcon’s President and Chief Executive Officer, said in a statement, “This has been a difficult time for Satcon. After careful consideration of available alternatives, the Company’s Board of Directors determined that the Chapter 11 filings were a necessary and prudent step, allowing the Company to continue to operate while giving us the opportunity to reorganize with a stronger balance sheet and capital structure. Our goal is for Satcon to emerge from bankruptcy reorganization and continue to provide our customers with the quality products that they need.”

The company is hoping to get court approval to continue to conduct business without interruption to minimize any impact on Satcon’s customers and employees. Satcon currently employs 260 people after cutting its workforce by 35 percent in July.

No federal money has been awarded to Satcon but the California Energy Commission (CEC) awarded Satcon, Renewable Energy Services, Sacramento Municipal Utility District (SMUD), and A123 Systems, which also filed for bankruptcy this week, a $2 million grant to develop methods to reduce renewable intermittency in July, according to a release.

According to Bloomberg news, Satcon listed assets of $92.3 million and debt of $121.9 million as of June 30 in the Chapter 11 documents that were filed today in Delaware.

Lead image: Debt via Shutterstock.

5 Comments

ANONYMOUS
October 23, 2012

To All-
Remember which developers and EPCs continued to push Satcon over the past 18 months. Basically if you own/bought a Satcon inverter after 2009 you are either "dumb money" or were misled by your solar consultant or contractor. Satcon's filing was inevitable and most industry participants have understood this for a long time.
Balance sheets and diversification of business lines are important to survival--Satcon had neither.

ANONYMOUS
October 19, 2012

Their customer base is up for grabs anyway so not sure why anyone would buy it since that does not guarantee you actually retain any of the customers? Especially after you raise the prices to cover the true cost structure.
The liabilities are quite large on the books but the bigger issue is that they likely did not accrue enough to cover the real warranty liability. So, to buy Satcon today you need $2M (the market cap value)plus $122M to cover the debt plus maybe another $20-30M to cover unprotected warranty liability. Unlikely there will be any takers.

Edward Lovelace
October 19, 2012

Agree that their finances were not sustainable, but it seems like their customer base was pretty solid and worth selling to a more stable global manufacturer prior to entering bankruptcy which is going to make existing customers less like to stay with them and their new owner. The new owner could stem that by absorbing all the warranty obligations.

ANONYMOUS
October 18, 2012

This event was unavoidable and a sign of consolidation in a growing industry. Most of the stories we read about solar in the press make it sound as if the industry is collapsing. Yet the truth is the solar industry is going through the exact growing pains which all industries experience as they mature. Larger players who manage their capital and products well will survive while those such as SatCon, who for years was detiorating will not. Let's try to find the good in this growth, not the bad. This industy is growing in the US at a faster rate than almost any other.. How bad is that??

ANONYMOUS
October 18, 2012

Satcon's bankruptcy was predicted by many in the inverter space for over a year who were warning customers that they were buying into products that would not be supported and warranties that would not be honored. You can not sell inverters at 20% CM and survive. Sales & marketing as well as product development costs are just too high to support low margins like this. It is likely the first of several exits in this overcrowded part of the market. At least two other companies for whom solar inverters are not their primary business are actively trying to sell their inverter divisions. Insider concensus is that one other smaller privately held entity who do not share their P&L are likely at risk. European based inverter only entities are cutting jobs as their home markets dry up and profits evaporate. REAL Bankability from the diversified global players will be the answer to the skittishness this failure will cause for the financing entities. However, developers and integrators will have to pay more from these global players to mitigate risk and to ensure these entities stay in the business of building inverters and developing the next generations of products. Expect inverter pricing to stabilize in the next 12 months and then start to follow a flatter path in the coming years. Developers need to understand that this is a good thing and that for Solar to survive all parts of the value chain need to be able to make a reasonable profit. Solar is finally growing up.

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Renewable Energy World's network editors help deliver the most comprehensive news coverage of the renewable energy industries. Based in the U.S. and the UK, the team is comprised of editors from Pennwell Corporation's myriad of publications...