Fired SunEdison Executives File Lawsuit

Way back on July 9, 2015, this blog author filed a request for a copy of the SunEdison contract with the city of Georgetown. It was clear then that SunEdison was in financial trouble and potentially posed a risk to Georgetown through the contract. The city denied the request for a copy of the contract with the concurrence of the Texas Attorney General. The city hid and continues to hide behind a state law that allows untility companies, both public and private, to withhold financial information from the citizens and concumers.

SunEdison delared bankruptcy last year to the surprise of the city of Georgetown.

"Two former executives at SunEdison Inc., the solar-power company that filed for bankruptcy protection last year, filed whistleblower lawsuits claiming they were fired after sounding the alarm about the company’s precarious finances.WSJ

Carlos Domenech and Pancho Perez, who held senior positions at two SunEdison subsidiaries, this week sued their former employers and top officials including former SunEdison Chief Executive Ahmad Chatila. They are seeking back pay and damages for what they say were retaliatory firings after they voiced concerns to senior management and the board.

The lawsuits, filed in Maryland federal court, echo much of what was in a Wall Street Journal article last year that chronicled SunEdison’s dizzying collapse and reported that company executives, including Mr. Chatila, had misrepresented its finances to investors before the bankruptcy.

A representative for SunEdison declined to comment. Mr. Chatila and other defendants, including SunEdison’s former chief financial officer, Brian Wuebbels, couldn’t be reached. They have declined in the past to comment.

Messrs. Domenech and Perez were senior executives at two subsidiaries, TerraForm Power Inc. and TerraForm Global Inc. The entities were publicly traded but controlled by SunEdison, and were key to providing financing that allowed the solar-project developer to grow quickly.

Mr. Chatila’s ambition to create a renewable-energy conglomerate the size of Google Inc. was brought down by a combination high debt, financial engineering and years of aggressive deal making. A planned takeover of a rooftop-solar company in 2015 was the tipping point, and the easy money that had been supplied by investors and Wall Street quickly dried up.

When that happened, SunEdison executives presented a rosier outlook to investors than they discussed internally and pressured business heads to change their projections to be more optimistic—even as the company was hemorrhaging cash, delaying payments and seeking emergency sources of funding, the Journal reported.

A presentation to investors in November of 2015 said SunEdison had $1.4 billion in cash. The same day, a report circulated to top executives showed about $90 million in available cash, according to a Journal report at the time and allegations in the recent lawsuits.

At an October 2015 meeting of senior management, Mr. Chatila and Mr. Wuebbels projected the company would burn through $1.3 billion of cash over the next six months or so, according to the lawsuits. When the two men presented to SunEdison’s board a week later, that figure was $650 million, the lawsuits allege.

Messrs. Domenech and Perez were among a group of senior executives who took their concerns to the board, according to the lawsuits. They allege in court filings this week that they were brushed aside and that company executives pressured them to go along with the revised projections showing the company on firmer footing.

Mr. Domenech was fired in late November 2015, at a board meeting in which several TerraForm executives and board members were replaced by SunEdison appointees, according to regulatory filings. Mr. Perez says he was forced to resign in January 2016.

SunEdison filed for bankruptcy protection last April. The Justice Department and the Securities and Exchange Commission opened investigations into whether management misled investors in the months before the filing.

The TerraForm entities didn’t file but remain in limbo, with large chunks of their stock tied up in the SunEdison estate. Brookfield Asset Management held talks about acquiring them late last year, according to regulatory filings. It is unclear where those talks stand."