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Sungevity Files for Chapter 11 Bankruptcy Protection, Plans to Sell All Assets Off

Layoff.jpgThe Mercury News reports that Sungevity, an Oakland-based renewable energy company, has filed for Chapter 11 bankruptcy protection. According to the report, Sungevity has laid off several hundred employees and now plans to sell itself off to Northern Pacific Group, a venture capital company firm based in Minnesota. This sale can only go through with approval from a bankruptcy court.

The Chapter 11 Filing Follows a Failed Buyout

Last June, an investment company called Easterly Acquisition Corp. announced its intentions to buy Sungevity. The value of the buyout deal was estimated to be in excess of $300 million. If it had been completed, Sungevity officials believe that it would have given their firm the capital needed to turn the business around and to compete against the top players in the residential solar energy market. Indeed, representatives of the company hoped to raise more than $600 million in relation to the proposed buyout. However, on December 31st, 2016, Easterly sent a letter to the Securities and Exchange Commission (SEC) informing regulators that the investment group no longer had any intent to purchase Sungevity.


WARN Act Claims against Sungevity

In relation to its bankruptcy filing, Sungevity is facing legal claims under the Wage Adjustment and Retraining Notification Act (WARN Act). The WARN Act is a federal labor law that is designed to protect workers and their families from unexpected layoffs or plant closures. When this law applies, it puts certain legal obligations on employers. Essentially, the law compels large companies to give advanced notice before mass layoffs. In this case, laid-off workers allege that Sungevity failed to live up to its obligations under the WARN Act. The workers who are party to the lawsuit claim that they were laid off without any notice whatsoever. Additionally, some of the laid-off workers allege that their last paychecks from the company bounced. Representatives from Sungevity acknowledge the issue with the paychecks and claim that the problem occurred as a result of a banking error and that it will be promptly fixed. Workers who have been hit by the layoffs, many of whom were employed in Oakland, are seeking damages in the amount of 60 days of pay. The reason for this is that the WARN Act requires a 60-day notice before a company can engage in mass layoffs. The WARN Act claim will need to be settled before the company can be sold off to investors.

Get Legal Help Now

At Diemer, Whitman & Cardosi, LLP, our passionate San Jose business bankruptcy attorneys have extensive experience handling Chapter 11 cases. To request a free, no-obligation review of your case, please do not hesitate to contact our team today. We proudly serve clients throughout the Bay Area, including in Santa Clara County, Alameda County, Marin County and Napa County.

Source:

http://www.mercurynews.com/2017/03/13/sungevity-tumbles-into-bankruptcy-lays-off-350/

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