• Lauren Windsor

Wall Street’s Solar Squeeze

Updated: May 24

Wall Street firms appear to be using trade petitions as leverage for investment returns under the guise of American manufacturing



Key Takeaways:

  • Current solar controversy initiated in February 2022 by Auxin Solar is part of ongoing solar tariff efforts initiated by Suniva in April 2017, days after it filed for bankruptcy.

  • A major creditor to Suniva, SQN Capital Management offered Suniva $4 million in bankruptcy financing, on the condition that it file a trade petition seeking relief from solar imports with the U.S. government.

  • In a 3 May 2017 letter to a Chinese chamber of commerce, SQN offered to shut down Suniva and thereby drop its trade petition, in exchange for $55 million.

  • Suniva emerged from bankruptcy – with the amazement of the presiding judge – under ownership of Lion Point Capital, a hedge fund founded by a protégé of vulture capitalist Paul Singer. (Lion Point had held approximately $38,000 in claims against Suniva, while SQN and its affiliates were owed more than $49 million.)

  • Lion Point had “an intent to pursue claims arising from U.S. government pursuit of anti-dumping sanctions and tariffs against competitors, particularly in China.”

  • In order to recoup their investments, both SQN and Lion Point appear to have pressured Chinese manufacturers with the threat of tariff petitions, which have materialized either by Suniva and Auxin Solar, an anonymous trade group of which Auxin was a part, or Auxin.

  • Suniva did not produce any panels from 2017 until at least December of 2021. Auxin Solar’s facility has recently been reported as “desolate.” Neither manufacturer appears to be manufacturing much of anything except for trade petitions.

A tiny San Jose-based manufacturer named Auxin Solar has roiled the solar industry with a recent petition to the Commerce Department to put tariffs on solar panels and components imported from four Southeast Asian countries. This effort builds on a series of trade petitions initiated in April 2017 by Atlanta-based solar manufacturer Suniva, which was then going through bankruptcy. Suniva emerged from bankruptcy in 2019 under the ownership of hedge fund Lion Point Capital, which was founded by a protégé of vulture capitalist Paul Singer.

Keep in mind the political backdrop for 2017 through 2020. Donald Trump – no fan of renewable energy – was assailing China for engaging in unfair trade practices and vowing to reinvigorate American manufacturing and fossil fuel production. He installed “King of Bankruptcy” billionaire vulture investor Wilbur Ross to run the Commerce Department, and named infamous billionaire corporate raider Carl Icahn as a special adviser on regulatory reform.

From May of 2017 to 2019, through the bankruptcy proceedings, Lion Point fought with another Wall Street firm, SQN Capital Management, for control of Suniva. SQN, which financed Suniva’s manufacturing equipment, offered Suniva $4 million in bankruptcy financing, conditioned on the filing of a trade petition seeking relief from solar imports from the U.S. government.

SQN approached a Chinese chamber of commerce with a 3 May 2017 letter offering to drop its trade petition in exchange for $55 million. This offer was predicated on SQN putting Suniva permanently out of business. If the Chinese chamber paid SQN $55 million, it would no longer have any interest in financing Suniva in bankruptcy; Suniva would cease operating; and its trade petition would have to be withdrawn.




In a 10 May 2017 court filing, Lion Point asked the presiding bankruptcy judge to deny SQN’s $4 million line of credit on the grounds that Lion Point would offer Suniva $10 million and on better terms. SQN held more than $49 million in claims, while Lion Point held approximately $38,000. When the bankruptcy wrapped in 2019, the judge expressed amazement. A Lion Point affiliate, Granite Holdings, emerged the owner, with “an intent to pursue claims arising from U.S. government pursuit of anti-dumping sanctions and tariffs against competitors, particularly in China.”

A well-placed source in the solar industry told me that Lion Point engaged in similar behavior as SQN over the past couple of years – by threatening two Chinese-headquartered solar manufacturers with additional tariff petitions if they did not invest in Suniva.

Suniva and Auxin Solar filed a tariff extension request to the Commerce Department jointly last August, and have collaborated in subsequent hearings to adjudicate it. Reason reported at the time that Suniva had not produced any solar panels since 2017. According to a December 2021 U.S. International Trade Commission hearing transcript, Suniva still owns its Georgia manufacturing plant, but it remains “temporarily idled.” With regard to Auxin Solar, Canary Media has called its San Jose work site “desolate.” Neither manufacturer appears to be manufacturing much of anything except for trade petitions.

Also last August, an anonymous group of American manufacturers called A-SMACC filed a petition building on Suniva’s 2017 petition to extend the tariffs imposed on Chinese-made panels in 2012 to four Southeast Asian countries, which Commerce rejected due to the anonymity of the stakeholders, one of whom was later revealed to be Auxin Solar. This February, Auxin filed a similar petition, leading many in the industry to speculate who else is behind the effort, particularly since its CEO, Mamun Rashid, acknowledged being the “face of the petition.”

These machinations leave us asking if these trade petitions are thinly veiled tools for American hedge funds to leverage returns from barely functional businesses, industries held hostage, and foreign holdings that might benefit – all in the name of saving American manufacturing.


 

Timeline

April 18, 2017 - Suniva files for bankruptcy, and eight days later, files trade complaints against global competitors under Section 201 and 202 of the Trade Act of 1974. SolarWorld joins the complaint a month later.

[PV Magazine]

May 3, 2017 - SQN Capital Management tries to squeeze Chinese manufacturers for $55 million in exchange for shutting down Suniva and dropping trade petition

[PV Magazine, GreenTechMedia]

May 10, 2017 - Lion Point Capital jumps into fray with SQN in Suniva bankruptcy case

[SPGlobal Market Intelligence]

January 2018 - Trump administration imposes Section 201 solar tariffs

[The Guardian]

**April 2019 - Lion Point Capital becomes owner of Suniva,** bankruptcy plan included intent to pursue tariff claims, particularly in China

[Law360]

June 2019 - SQN rescued in Suniva bankruptcy

[Citywire]

August 2021 - Auxin and Suniva file for extension of solar panel tariffs

[Auxin Press Release] [Cassidy Levy Kent Release]

August 2021 - Anonymous trade group American Solar Manufacturers Against Chinese Circumvention (“A-SMACC”) files a petition to Commerce requesting investigation of whether companies operating in four Southeast Asian countries are circumventing Chinese trade tariffs.

[Wiley Law]

August 2021 - Suniva hasn’t made a solar panel since 2017

[Reason]

November 2021 - Commerce rejects A-SMACC petition, citing anonymity as chief cause

[PV Magazine]

February 2022 - Auxin files petition identical to A-SMACC petition, WSJ later reveals Auxin to have been a member of that anonymous group

[Wall Street Journal]

April 2022 - Commerce launches investigation into Auxin’s petition claims

[Forbes]

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