TerraForm Sued Parent Company SunEdison for Diverting $231 Million Projects Money to Its Own Balance Sheet
By Staff Writer
Apr 06, 2016 06:19 AM EDT
Apr 06, 2016 06:19 AM EDT
TerraForm Global sued its controlling shareholder and parent company SunEdison for allegations of misappropriating cash for its projects in India. SunEdison is accused to have channeled $231 million for the project to the company's own balance sheet.
The $231 million was supposed to be used to finish a nearly complete renewable energy projects in India. The lawsuit revealed that in return, TerraFrom would receive the parent company's equity interests in those deals. "SunEdison instead diverted the funds to prop up its flagging liquidity position rather than to fund the projects in India as promised," as revealed in the lawsuit.
According to Livemint, TerraForm named three members of its own board of directors as defendants. The lawsuit mentioned Ahmad Chatila, Martin Truong, and Brian Wuebbels to have participated in the plan to misappropriate TerraForm's assets for SunEdison's balance sheet. The three are also senior executives for SunEdison.
Before filing the lawsuit, TerraForm has reportedly warned SunEdison, saying that it might not transfer the India projects and might not complete other deals. The warning was issued last week, also noting that SunEdison might soon be facing bankruptcy following series of financial woes.
SunEdison is being investigated by federal officials, as reported by Fortune. In a regulatory filing on the end of March, TerraForm Global also revealed that its parent company SunEdison is at "substantial risk" of seeking bankruptcy protection.
SunEdison, one of the largest global renewable energy company before, has been facing serious financial problems following a $2.6 billion buying binge. The company failed to complete some of the transactions, resulting in lawsuits that cost it money.
Other reports claimed that SunEdison has been owing money from many businesses, ranging from Silicon Valley venture capitalists to small Massachusetts solar installer, as reported by Reuters. Its financial woes has brought as much as two dozen legal claims against the company and its executives.
Following the news of TerraForm's lawsuit against SunEdison, the company's shares fell. TerraForm Global dropped 6.8 percent to $2.18 on Nasdaq following the lawsuit. SunEdison, on the other hand, has been suffering from fallen shares, as the company's shares have plummeted about 98 percent over the past 12 months due to prolonged financial problems.
SunEdison is faced with a lawsuit from TerraForm over allegations of money misallocating. The parent company allegedly channeled $231 million that was supposed to be used for solar panel projects in India into its own balance sheet. The lawsuit adds up to dozens of other lawsuits and financial problems experienced by SunEdison.
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