Kailua-based solar energy firm Sunetric has been hit with an involuntary Chapter 7 bankruptcy lawsuit for alleged unpaid bills totaling $215,000.
A petition signed by four Honolulu-based creditors was filed July 30 in U.S. Bankruptcy Court against Elemental Energy, which is doing business as Sunetric.
The company was founded by Sean Mullen in 2004 as Suntech Hawaii and has approximately 50 employees.
The creditors are all represented by Honolulu bankruptcy attorney Chuck C. Choi, a partner at Wagner Choi & Verbrugge.
A former Sunetric executive is the largest creditor on the petition. Joshua Powell, who resigned in May as vice president of construction operations for Sunetric to handle similar duties at Distributed Energy Partners, claims he is owed $175,000 in compensation. He is a founding partner at Distributed Energy Partners.
The other petitioning creditors in the case are Allison-Ide Structural Engineers LLC, which claims it is owed $12,985.12 for “services”; construction company PLS Builders, for “services” totaling $21,818.91; and public relations firm Pang Communications, which claims it is owed $5,204.76.
“It is unfortunate that this petition came about, fueled by a few disgruntled ex-employees who recently started a competing company,” Mullen said in a prepared statement Wednesday. “Sunetric and its legal team will be vigorously opposing the petition, as we believe this case is meritless. Sunetric continues to pay our vendors in a timely manner. This year is no different from last year’s remarkable growth for our company, as we continue to grow in profitability.”
Sunetric focuses mainly on the residential market for rooftop photovoltaic systems and solar hot water heaters. It was responsible for about a fourth of the PV systems that went online in Hawaii last year.
The company saw sales increase from $3 million in 2007 to $30 million in 2008.
Choi said he advised his clients not to comment on the case. He said a summons is expected to be served to Sunetric this week.
Involuntary bankruptcy under Chapter 7, which orders liquidation of assets, can be filed by petitioners to try to force companies that owe them money into bankruptcy. All it takes is a petition signed by at least three creditors with significant, bona fide claims.
This type of suit is typically filed for two reasons: to make sure there is an equal distribution to all creditors, and to make sure the company’s assets are not improperly diverted to other places.
Involuntary petitions are usually filed as Chapter 7 liquidation bankruptcies, rather than under Chapter 11, because the filing fee is cheaper ($299). They can be converted to Chapter 11 reorganization if not dismissed.
Choi said once the summons is served, Sunetric will have an opportunity to respond to the claims.
If the allegations are disputed, the case will go to trial in bankruptcy court. If the claims are found to be valid, a bankruptcy judge can order the liquidation of assets to pay the creditors