Horowitz v. SunEdison, Inc.

Court: U.S. District Court for the Southern District of New York
Case Number: 16-cv-01769-PKC
Judge: Hon. P. Kevin Castel
Class Period: 08/07/2014 - 04/04/2016
Case Contacts: Salvatore J. Graziano, Katherine M. Sinderson, Adam Hollander

This is a securities class action on behalf of all persons and entities who purchased or acquired the securities of SunEdison, Inc. (“SunEdison” or the “Company”) between August 7, 2014 and April 4, 2016, inclusive (the “Class Period”).  This action asserts claims under the federal securities laws against SunEdison, SunEdison CEO Ahmad Chatila, and former CFO Brian Wuebbels (collectively, “Defendants”).

The action alleges that SunEdison, at one time one of the largest renewable energy companies in the world, misled investors concerning its financial condition.  Specifically, throughout the Class Period, SunEdison and its senior executives defrauded investors through a series of misrepresentations concerning the Company’s liquidity position, debt profile, and the viability of SunEdison’s business strategy, including by representing that the Company had a “strong liquidity position” to support its business. 

Investors began to learn the truth about the Company’s financial condition through a series of corrective disclosures.  For example, beginning in November 2015, the Company disclosed that it had reclassified approximately $740 million worth of “non-recourse” debt as “recourse,” thereby admitting that the Company had misrepresented the nature of its debt and that, in truth, the lenders on these obligations could recover directly from the Company.  In addition, SunEdison disclosed that it had entered into a one-year $170 million loan with Goldman Sachs at an effective 15% interest rate in August 2015—i.e., at the same time that the Company was assuring investors that its liquidity position was strong.  Contrary to Defendants’ representations, analysts explained that a loan with these terms demonstrated that the Company had “emergency cash needs” because no borrower would be forced to take out a loan on such terms other than a “distressed company.”  

Then, on January 7, 2016, SunEdison announced a debt restructuring plan that revealed the Company’s financial condition was much worse than Defendants had led investors to believe.  As a result of the disclosures of SunEdison’s true financial condition, the Company’s stock has declined over 95% from its Class Period high. 

On March 31, 2016, SunEdison confirmed that it was under investigation by the U.S. Securities and Exchange Commission and the U.S. Department of Justice concerning the disclosures the Company had made to investors related to its liquidity and financial position.   

On March 24, 2016, the Honorable Rodney W. Sippel of the United States District Court for the Eastern District of Missouri appointed the Municipal Employees’ Retirement System of Michigan as Lead Plaintiff and BLB&G as Lead Counsel.

On April 21, 2016, SunEdison filed for bankruptcy before the United States Bankruptcy Court for the Southern District of New York.  On April 25, SunEdison filed a notice of bankruptcy filing, notifying the District Court for the Eastern District of Missouri that any further action against the Company was stayed pursuant to the automatic bankruptcy stay of United States Bankruptcy Code.  On April 26, in light of SunEdison’s notice of bankruptcy, the District Court for the Eastern District of Missouri issued an order administratively closing the action.  On April 28, Lead Plaintiff filed its motion to lift the bankruptcy stay, maintaining that the bankruptcy stay applied only to the debtor company, SunEdison, and did not apply to non-debtor defendants, including SunEdison’s executives, directors, and the underwriters of SunEdison’s Class Period offerings.  On July 19, 2016, the Court issued an order permitting Lead Plaintiff to file a consolidated amended securities class action complaint (the “CAC”) against non-debtor defendants.  Lead Plaintiff filed the CAC, three days later, on July 22, 2016, against SunEdison’s former CEO and CFO, its Class Period directors, the underwriters of SunEdison’s August 2015 Preferred Offering, and SunEdison’s Class Period outside auditor, KPMG. 

In July 2016, Lead Plaintiff filed a motion before the United States Judicial Panel on Multidistrict Litigation (the “MDL Panel”) to transfer this case and multiple other related cases pending nationwide to the Southern District of New York.  On October 4, 2016, the Panel granted Lead Plaintiffs’ motion and transferred this case to Judge Castel of the Southern District of New York.

On March 17, 2017, Plaintiffs filed a Second Amended Consolidated Class Action Complaint (the “SAC”).  On June 9, 2017, Defendants filed their motions to dismiss the SAC. 

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