Not long after losing a deal to become a public company and raise much-needed capital, rooftop solar provider Sungevity Inc. has laid off workers, filed for Chapter 11 bankruptcy and entered a new agreement to sell its assets.
Although Sungevity says in its announcement that it expects operations to continue uninterrupted during the Chapter 11 proceedings, the company substantially reduced its workforce before filing for bankruptcy. Citing “a source with knowledge of the company’s operations,” The Mercury News reports that Sungevity cut 350 jobs last week. (When reached for comment, a Sungevity representative acknowledged the company did, in fact, eliminate jobs but would not confirm that number.)
One major benefit of Sungevity’s new agreement is that the group of investors has committed to provide the company with up to $20 million in financing. Subject to interim court approval, the financing will be immediately available to Sungevity to be used to fund the company’s day-to-day operations, as well as to pay any expenses related to the Chapter 11 proceedings.
“The agreement we have reached with the team led by Northern Pacific Group and its co-investors is a testament to their confidence in the future of Sungevity’s business,” says William Nettles, Sungevity’s newly appointed chief administration officer, in the company announcement. “The actions we have announced today will allow Sungevity to emerge as a stronger and more competitive company. With its market-leading software platform and its high-quality employees who provide unwavering commitment to customers and exceptional service, Sungevity intends to be at the forefront of the industry as solar continues on its growth trajectory in the years ahead.”
“The board and its advisors reviewed a range of options and ultimately decided that a court-supervised sale represents the best path forward for our customers, suppliers, employees and business partners,” adds Sungevity CEO Andrew Birch. “During the sale process, our team will remain committed to serving our customers and delivering our industry-leading service. Our ample on-hand inventory and uninterrupted installment contracts position us well to continue fulfilling our customers’ orders. Sungevity has long been a pioneer in the field of residential solar installation, and we believe that this represents a step forward for the company.”
However, Sungevity was counting on that reverse-merger agreement in order to raise capital and work toward becoming a profitable company. As Raj Prabhu, CEO and co-founder of Mercom Capital Group, said in January, “Financing is the biggest challenge. Considering that most installers, including Sungevity, are not profitable, it is make or break unless you continue to raise capital.”