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NovaSolar faces dismissal

by Aviva Gat | Published July 23, 2012 at 2:54 PM

Solar panel maker NovaSolar Inc. will have to prove that it deserves to remain in Chapter 11 after allegedly failing to file certain documents.

Judge Charles Novack of the U.S. Bankruptcy Court for the Northern District of California in San Jose is scheduled on Aug. 2 to consider dismissing or converting the case to a Chapter 7 liquidation.

The court's clerk, Gloria L. Franklin, on July 10 moved the court to issue an order forcing NovaSolar to show cause why it should remain in Chapter 11. In her report, Franklin said the debtor has failed to file the requisite documents, including certain schedules. Novack approved the motion on July 11.

NovaSolar responded to Franklin's motion on July 20, asserting it has filed all the necessary documents. The debtor asked the order to show cause be withdrawn and the Aug. 2 hearing be canceled.

In the response, the debtor said it attended its initial debtor interview with the U.S. trustee's office on July 10 and attended a creditor's meeting on July 18.

NovaSolar filed for Chapter 11 on June 15. The company had yet to file any motions or requests as of Monday, July 23.

NovaSolar makes thin-film silicon solar modules made with a single sheet of glass, with thin layers of other materials such as silicon, aluminum or zinc. The panels are then covered with a polymer backcoat, according to the company's website.

NovaSolar boasts its solar panels have one of the lowest costs per kilowatt hour for utility-scale applications over a 25-year operation period. The company also said its panels produce up to 15% more kilowatt hours than other solar panels and are the most "green" and sustainable products around.

The Fremont, Calif., company is a successor to OptiSolar Inc., which Hewlett-Packard Co. chief technology officer Marvin Keshner founded in 2006.

According to its website, OptiSolar invested about $340 million into its research and development facilities in its first year. Then, on Aug. 14, 2008, OptiSolar was awarded a contract to build an 800-megawatt facility for Pacific Gas and Electric Co. According to the press release, the facility could generate enough power to supply 239,000 residential homes.

However, OptiSolar was forced to shut down production in March 2009 due to financial distress. The company sold all its uncompleted contracts to First Solar Inc. for $400 million.

NovaSolar was created in April 2009 through an asset and management acquisition. The new company's headquarters were set up in Hong Kong in early 2010. That year, NovaSolar also acquired a manufacturing facility in Yangzhou, China.

After gradually acquiring OptiSolar's assets over about two years, the company signed its first solar contract to build a two-megawatt solar farm in China in May 2011. By September, the company had contracts to build solar farms with a total of 1,000 megawatts.

What happened since then that led to the Chapter 11 petition is unclear. NovaSolar's website said the company expected to begin manufacturing in the first quarter of 2012.

Debtor counsel Scott L. Goodsell of Campeau Goodsell Smith declined comment. His colleague at the firm, William J. Healy, could not be reached.

Calls to the debtor's Fremont office were not returned.

In its petition, NovaSolar listed $6 million in assets and $14 million in liabilities.

Its largest unsecured creditors are Arden Realty LP (owed $6.8 million), XL Construction Corp. ($2.4 million) and Smit Ovens BV ($183,612).

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