Solar panel manufacturer Suntech Power Holdings Co. Ltd. (NYSE: STP)’s China-based subsidiary was placed into bankruptcy by a Chinese court on March 21.
The news comes after many U.S.-based companies sought bankruptcy protection, partially due to increased competition from Chinese manufacturers.
The subsidiary, Wuxi Suntech Power Holdings Co. Ltd., was placed into administration by a Chinese court which appointed administrators to restructure the company.
The court-appointed administration committee consists of local government representatives and accounting and legal professionals that will attempt to restructure Wuxi Suntech. The company will continue operations during the bankruptcy case.
On March 18, a group of eight Chinese banks filed a petition for insolvency and restructuring of Wuxi Suntech in the Wuxi Municipal Intermediate People’s Court in Jiangsu, China.
Wuxi Suntech manufactures photovoltaic cells and photovoltaic modules in China for solar panels. The company has production facilities in Wuxi, Shanghai and Luoyang. Reports indicate that the company defaulted on $541 million in bonds.
Suntech Power’s U.S. operates are based out of San Francisco. The company has not filed for bankruptcy protection. The company operates in China, Switzerland and the U.S.
Evergreen Solar, which manufactured of multicrystalline silicon wafers for solar panels, sought bankruptcy protection on Aug. 15, 2011. The company said in court papers that to meet increasing competition from Chinese solar panel makers and to reduce costs, it started manufacturing products in a Wuhan, China facility.
Chinese solar power manufacturers received continuous government and financial support, which coupled with the country’s low manufacturing costs, created lower prices, Evergreen said in court documents.
The filing casts a spotlight on the risks that come with investing in solar panel manufacturers, namely after the collapse of Solyndra LLC.
The Fremont, Calif.-based company, which filed for bankruptcy on Sept. 6, 2011, said in court papers that one of the reasons it sought bankruptcy protection was an oversupply of solar panels in the market due to the growing capacity of foreign manufacturers, which reduced pricing.
SpectraWatt, which manufactured multicrystalline silicon wafers for solar panels, sought bankruptcy protection on Aug. 19, 2011. Among other troubles, the company said in court documents that U.S. solar panel makers were under stress because of manufacturers in China and other places.
Evergreen, Solyndra and SpectraWatt liquidated.
Germany's Q-Cells, one of the largest solar energy companies, also filed for bankruptcy in April 2012, citing competition from Asian companies. The filing was preceded by three other German solar companies that slid into bankruptcy. Berlin-based Solon and Erlangen-based Solar Millennium each filed in in December 2011, while Freiburg-based Scheuten Solar declared bankruptcy in March 2012.