(Updates with excerpt from court documents in third paragraph.)
Sept. 2 (Bloomberg) -- Low-ranking creditors of Evergreen Solar Inc. asked a judge to reject a proposal to turn the bankrupt company over to its lenders at an auction and move all production of its solar panels to China.
Evergreen’s lenders are using their status as secured creditors to quickly take control of the company without making any payment on lower-ranking debts, the official committee of unsecured creditors said in court papers filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
“The relief sought is tantamount to the secured creditors renting the bankruptcy process for their own parochial purposes and using unsecured creditors’ money to pay the landlord,” unsecured creditors said in court papers filed yesterday.
The company, based in Marlboro, Massachusetts, filed for bankruptcy last month, blaming increased competition from government-subsidized solar-panel makers in China and the failure of the U.S. to adopt clean-energy policies.
The company has plans to move all manufacturing to China, where it has a factory that is part of a joint venture with the local government, unsecured creditors said in court papers.
The committee, represented by the law firm Kramer Levin Naftalis & Frankel LLP, asked U.S. Bankruptcy Judge Mary Walrath to reject the company’s proposal for an auction and other related requests. The committee wants Evergreen to give unsecured creditors more time to prepare for a possible sale and to include them in the auction process.
Under the proposed auction rules, Evergreen’s lenders would trade their debt for control of the company, unless a higher offer came in.
Evergreen bankruptcy attorney P. Sabin Willett didn’t immediately return a call seeking comment on the filing.
The case is In re Evergreen Solar Inc. 11-12590, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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