Chinese solar manufacturer Suntech declares bankruptcy

Suntech Power, the world's biggest solar panel manufacturer was forced into bankruptcy court Wednesday.
Suntech Power, the world's biggest solar panel manufacturer was forced into bankruptcy court Wednesday.

BEIJING — Suntech, one of the world’s biggest solar-panel manufacturers, was forced into bankruptcy court Wednesday, becoming the latest casualty of a painful slump in the global solar industry.

Suntech Power Holdings Ltd. said eight Chinese banks asked a court to declare it insolvent after the company missed a $541 million payment to bondholders last week. Suntech said it would not oppose the petition.

The development is a dramatic reversal for a company that was a leading force in China’s fast-growing renewable energy industry. Its founder, Shi Zhengrong, has seen much of his multibillion-dollar fortune evaporate.

“While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base,” Suntech CEO David King said in a statement. “During this period, we will continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth.”

Solar-panel makers have suffered huge losses over the past year after rapidly growing production capacity outstripped demand and prices plunged. Another industry giant, Germany’s Q-Cells, filed for bankruptcy last April.

Suntech, with headquarters in the eastern city of Wuxi, west of Shanghai, also has been hurt by a revelation in July that a business partner faked $680 million in collateral for a loan Suntech had guaranteed.

“Suntech’s bankruptcy rather strengthens the position of other leading suppliers,” said Stefan de Haan, a solar analyst at IHS Inc. in Munich. “The consolidation in the PV industry will continue. There are still many hundreds of suppliers, and there is still a fundamental overcapacity in the market.”

Among those benefiting Wednesday was First Solar Inc., which saw its stock price rise six percent to close at $29.49. First Solar started in Toledo before moving its headquarters to Tempe, Ariz. 

Its only U.S. production facility is in Perrysburg Township. First Solar was the world’s fourth-biggest solar panel manufacturer in 2012.

The glut of supply in the solar-panel market was brought on in large part by the Chinese government’s efforts to promote the industry.

But a 10-fold expansion of overall Chinese solar panel manufacturing capacity from 2008 to 2012 produced a three-quarters drop in solar panel prices, undermining the economics of the business. Rapid expansion of natural-gas production in the United States and a curtailment of subsidies in the European Union also hurt solar-panel prices, as did a U.S. imposition last year of import tariffs totaling about 40 percent after an anti-dumping and anti-subsidy investigation