Monday, June 27, 2022

Sunedison Inc (OTCMKTS:SUNEQ) Letting Some Ride Off into the Sunset

Sunedison Inc (OTCMKTS:SUNEQ) is trading up today but could be suspended at any moment. SUNEQ is raising the needle +100% at the time of writing and if you are not familiar with the company or the just completed bankruptcy case, you might have missed one of the most important stories in valuation in a long time.
Furthermore, SUNEQ represents how shareholders are too often left holding the bag with rules that are not written in their favor. Many SUNEQ investors believe there was a conspiracy to rob them of their investment and there is evidence to support that but the presiding judge in SUNEQ’s case did not think it was substantial or relevant for a bankruptcy proceeding.
Sunedison Inc (OTCMKTS:SUNEQ) will not receive a private equity committee or extra time for shareholders. The recent run is probably covering shorts before share cancellation, but this is still a speculation.
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Here are some important quotes from Judge Bernstein about his decision to not allow shareholders requests:
“Emails that I have received…hint at a nefarious conspiracy involving the Debtors, creditors, lenders and others, or that the shareholders are the victims of theft and robbery, but no probative evidence of any post-petition wrongdoing has been presented to the Court.”
He continues:
“The testimonial and documentary evidence showed that despite the values reflected in…financial statements, the Debtors would probably realize no more than $1.5 billion from the orderly liquidation of their assets, well shy of the $4.2 billion in secured and unsecured debt disclosed by the evidence.”
He added this about giving the company more time:
“It is all well and good for the shareholders to request or demand a further investigation, or the appointment of an official equity committee to undertake it, but somebody has to pay for it, and the creditors are unwilling to spend the funds in the estate for that purpose.”
All this means is that SunEdison and its professional advisors proved that the company was only worth approximately $1 billion, an amount nowhere near sufficient to satisfy claims against the estate. And shareholders were not able to meet their burden of proving that there was additional value available for distribution to any parties, let alone to shareholders standing last in line.
As we always note with these stocks in the past: it’s very important to remember that most Chapter 11 common equity issues end up worthless when the dust settles. After all, bankruptcy is filed for a reason – because the debt is impossible to service. That is the definition of a hopeless situation for common equity holders due to the principle of subordination. Q shares are at the very bottom of the totem pole. The rare exceptions to this rule generally appear in the commodities space, where a sudden turn in the value of the commodity back to the upside can rationally revalue a company’s assets and reassert viability among debt-holders.
Sunedison Inc (OTCMKTS:SUNEQ) is seeing some traders take a profit run here before a fall. SUNEQ is a story that will soon be forgotten and left off the front page, but many will not forget and others should learn from those who lost dearly. For continuing coverage on shares of $SUNEQ stock and other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $SUNEQ, either long or short, and we have not been compensated for this article.

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