A New York judge Thursday issued a temporary restraining order barring troubled solar developer SunEdison Inc. from making any unusual moves with its assets pending a showdown with unhappy investors in a Latin America venture.
The temporary restraining order, or TRO, from New York Supreme Court Justice Charles E. Ramos will stay in place until a Feb. 25 court hearing in a lawsuit brought by investors in Latin America Power Holding B.V. against SunEdison in connection with its failed buyout of Latin America Power.
The TRO bars SunEdison, its holding company and Terraform Power Inc. affiliate from “concealing, transferring or removing their assets, accounts or other property that may be subject to attachment,” except for fair value and in the ordinary course of business, court papers show.
Justice Ramos said he didn’t want to interfere with SunEdison’s ability to operate its business as usual but wanted a temporary standstill on actions that are out of the ordinary, according to a person present at the hearing in the New York Supreme Court.
SunEdison’s normal business operations won’t be affected by the TRO, SunEdison spokesman Ben Harborne said Thursday.
“We appreciate the constructive hearing and the judge’s thoughtful approach, confirming that we can continue to conduct our business without undue interference. This includes the transfer of assets for fair consideration in the ordinary course of business, which conforms to the existing policies of both companies,” Mr. Harborne said in an email.
A spokesman for SunEdison wasn’t immediately able to comment Thursday on the ruling, which grew out of legal action initiated by shareholders in Latin America Power, a developer of alternative power projects in Chile and Peru that SunEdison had agreed to buy.
After the deal fell through, Latin America shareholders initiated arbitration and ultimately turned to the New York court, afraid SunEdison’s mounting financial troubles create a risk that it won’t be able to cover a potential $150 million loss in arbitration.
SunEdison’s Mr. Harborne has said the lawsuit’s allegations are “without merit.”
Judge Ramos issued the TRO a day after Latin America Power shareholders sought an emergency hearing on the grounds that SunEdison “could suddenly and rapidly become insolvent” or move to dissipate assets before the New York court could act on their bid to attach $150 million of assets, court papers say.
The $150 million figure is the minimum amount of damages Latin America Power shareholders are seeking in arbitration against SunEdison over last year’s failed buyout.
SunEdison had agreed to a $733 million deal for Latin America Power assets but failed to wire the funds to go through with the deal, court papers say.
SunEdison, of California, engaged in complex financial engineering to develop its solar power plants, a strategy that helped it grow, but led to problems when the affiliates it spawned to draw in outside investors began to lose favor with the markets.
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