Former SunEdison Executives Fight to Keep Whistleblower Suits Alive
BY Dow Jones & Company, Inc.
— 6:11 PM ET 06/22/2017
Two former SunEdison Inc. executives, who say they were improperly dismissed after repeatedly raising concerns about the now-bankrupt solar-power developer's finances, are objecting to a key settlement that aims to extinguish claims against the company, its affiliates and other former leaders.
In court papers filed Wednesday with the U.S. Bankruptcy Court in New York, Carlos Domenech and Pancho Perez said they don't intend to join the settlement and want assurances it won't dim the prospects of what they call "statutorily protected whistleblowing activity."
The two are seeking damages for lost wages, benefits and bonuses in whistleblower complaints filed with the Labor Department last year. Messrs. Domenech and Perez say they were fired from their roles at SunEdison in retaliation for refusing to go along with financial projections showing the company to be on firmer footing than they believed to be true.
Their lawsuits target former employers including TerraForm Power Inc. ( TERP
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) and TerraForm Global Inc., separate companies launched by SunEdison, as well as top officials including former SunEdison Chief Executive Ahmad Chatila. A representative for the TerraForm companies didn't immediately respond to a request for comment Thursday. Mr. Chatila couldn't be reached.
Investors, hedge funds, individuals and former unit TerraForm Global have also brought lawsuits in California, New York, Delaware and elsewhere, naming officers, directors and the company itself as defendants.
SunEdison's ( SUNEQ ) unsecured creditors--who are among the last in line to be repaid in the bankruptcy--had previously threatened to go after current and former leaders, who they said ignored their fiduciary responsibilities, violated securities laws and generally mismanaged the company during its debt-fueled expansion and subsequent collapse. At the time, those creditors pegged the potential damages at "hundreds of millions of dollars, if not more."
Earlier this month, lawyers for SunEdison unveiled the details of a pact with unsecured creditors that, if approved, would dole out legal immunity to many former SunEdison officers and directors in exchange for $32 million in insurance proceeds. Messrs. Domenech and Perez say the settlement, which is meant to ease SunEdison's ( SUNEQ
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) exit from bankruptcy by clearing up the looming tangle of potential litigation, tramples their rights.
A hearing on approval of the settlement is slated for June 28 before Judge Stuart Bernstein, who will have to decide if the whistleblower lawsuits should be exempted from the settlement or are unprotected and can be discharged.
Court papers show Mr. Domenech was fired in late November 2015, at a board meeting in which several TerraForm executives and board members were replaced by SunEdison appointees. Mr. Perez later resigned in January 2016.
SunEdison filed for bankruptcy in April 2016, buckling under a mountain of debt and questions about its finances that sparked federal probes. A spokesman for the company did not respond to a request for comment Thursday.
SunEdison's ( SUNEQ
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) proposed chapter 11 plan, which goes up for final court approval July 20, outlines how the troubled renewable energy developer expects to repay billions of dollars it owes to creditors using a much smaller pool of assets. Those assets include proceeds from a number of settlements as well as the sale of its portfolio of solar power projects.
--Peg Brickley and Liz Hoffman contributed to this article.
Write to Tom Corrigan at tom.corrigan@wsj.com
