SunEdison Inc. filed for bankruptcy protection after a two-year,$3.1 billion acquisition binge that drove its debt to unmanageablelevels and sent investors running for the exits.

The clean-power giant listed $16.1 billion of debt in Chapter 11filings Thursday in Manhattan federal court, making it thebiggest U.S. bankruptcy in more than a year. While the buying spreeultimately did SunEdison in, the bankruptcy comes as energycompanies of all sorts are succumbing to a slump inprices.

The company's business model—building clean energy plants aroundthe world and then spinning them off to publicly held companies itcontrols—may also complicate its reorganization effort. Whiletwo of its best known companies, TerraForm Power Inc. and TerraFormGlobal Inc., are not part of the bankruptcy, SunEdison acknowledgedresponsibility for some of their debt in court papers.

“SunEdison will have to figure out what to do with its interestsin the TerraForm entities,” Julia Winters, an analyst withBloomberg Intelligence said. “Are they going to give equityinterest in the TerraForms to its creditors on account of theirdebt?”

TerraForm Power was founded as an indirect unit of SunEdison tobuy the parent's clean-energy power plants. Shares and other assetsowned by the publicly traded company and its sister entity,TerraForm Global, aren't available to help pay SunEdison's debts,it said in a statement Thursday.

The companies, which haven't yet filed their 2015 annualreports, “have no plans to file for bankruptcy,” according to thestatement. The units have hired AlixPartners LLP as a financialadviser to protect their financial interests in any reorganization,two people familiar with the situation have said.

In its bankruptcy filing, SunEdison also listed more than $750million worth of unsecured claims that it plans to dispute,including $200 million allegedly owed to the Brazilian renewableenergy company, Renova Energia SA.

Liquidity Issues

Bankruptcy was the best way to deal with a cash crisis,SunEdison said Thursday. Its shares plunged to less than 40 centsbefore trading was suspended.

“Our decision to initiate a court-supervised restructuring was adifficult but important step to address our immediate liquidityissues,” SunEdison CEO Ahmad Chatila, said in a statement. Thecompany will use the bankruptcy process to cut debt and shed“non-core assets,” he said.

SunEdison has commitments for $300 million in financing tosupport day-to-day operations during the reorganization. The moneyis being supplied by a group of first- and second-lien lenders, thecompany said in the statement. In court papers, the company said itmay also refinance as much as $350 million worth of second-lienloans and second-lien notes.

The $300 million loan will help stabilize some of the company'sunfinished projects while it restructures, Jenny Chase, an analystat Bloomberg New Energy Finance, said in a research noteThursday.

Many Faces of Trouble at SunEdison

SunEdison's spending spree ended in March when the company's$1.9 billion deal for Vivint Solar Inc. fell apart. Federalregulators are probing the canceled sale, and Vivint has filedsuit.

The Maryland Heights, Missouri-based company began its shoppingbinge in 2014, buying up wind and solar projects on every continentexcept Antarctica. At first the market responded positively,driving SunEdison's shares to a peak of $32.

Investors began to question the company's business model when itannounced plans to purchase Vivint in July at a 52 percentpremium. At $2.2 billion, it would have been SunEdison'sbiggest deal. Furthermore, Vivint installs rooftop solar systems, avery different market from SunEdison's other acquisitions, whichwere mainly big, utility-scale power plants.

The transaction was delayed, renegotiated down to $1.9 billion,and finally canceled in March when lenders pulled financing afterSunEdison said it needed more time to prepare its 2015 annualreport. Analysts were left wondering whether a lawsuit over thefailed deal would drive the company into bankruptcy.

The company's troubles have been manifold. It recently disclosedthat it received a subpoena from the U.S. Justice Department and asimilar inquiry from the Securities and Exchange Commission. Thegovernment is seeking information about the scrapped Vivint dealand the conduct of a former employee alleged to have committedwrongdoing “in connection with the Vivint terminationnegotiations,” SunEdison said in a regulatory filing.

This month, SunEdison said an independent counsel hired by itsboard identified “wrongdoing” by a former employee and an “overlyoptimistic” culture fostered by management. According to thecompany, an unidentified non-executive employee was fired foractions related to the Vivint deal, which weren't described.

There are also squabbles involving TerraForm. Two creditors havesued TerraForm Power seeking $231 million related to an acquisitionlast year. TerraForm Global sued SunEdison over renewable-energyprojects in India.

SunEdison hired Skadden, Arps, Slate, Meagher & Flom LLP asits main bankruptcy law firm and named as its restructuringadvisers Rothschild Inc. and McKinsey & Co.'s Recovery &Transformation Services unit.

The case is In re SunEdison Inc., 16-10992, U.S. BankruptcyCourt, Southern District of New York (Manhattan).

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