Print Page  |  Close Window

SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 12/21/2016
Entire Document
 

assurance that substantive consolidation will not be requested in the future or that the bankruptcy court would not consider it.

To the extent the bankruptcy court were to determine that substantive consolidation was appropriate under the facts
and circumstances, then the assets and liabilities of any entity that was subject to the substantive consolidation order could be
available to help satisfy the debt or contractual obligations of other entities. Bankruptcy courts have broad equitable powers,
and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict. Due to the significant liabilities of
SunEdison, substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy would
impede our ability to satisfy our liabilities in the normal course of business and otherwise restrict our operations and capacity to
function as a stand-alone enterprise. As a result of the foregoing, our financial statements for the year ended December 31, 2015
and the related audit report include an explanatory note regarding the Company’s ability to continue as a going concern.

We have expended and may continue to expend significant resources in connection with the SunEdison Bankruptcy.
We have expended significant resources on contingency planning and other matters, resulting from the SunEdison Bankruptcy. Our additional expenses include legal fees, consultant and financial advisor fees and related expenses, and it is likely that such expenses will continue during the duration of the SunEdison Bankruptcy. We have also dedicated, and anticipate that we will continue to dedicate, significant internal resources and management time to contingency planning and to addressing the consequences of the SunEdison Bankruptcy. This has reduced, and may continue to reduce, the internal time and resources available for other areas of our business and substantially increase our operating expenses.
The SunEdison Bankruptcy has subjected us to increased litigation risk, including claims seeking to avoid payments SunEdison made to us or transactions that we consummated with SunEdison in the period prior to the SunEdison Bankruptcy.
The SunEdison Bankruptcy has resulted in the Company being subject to litigation that will increase our exposure to litigation costs and divert substantial time and resources of our management. On November 7, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed a motion with the bankruptcy court seeking standing to assert against the Company, on behalf of SunEdison, avoidance claims arising from intercompany transactions between the Company and SunEdison. The Company expects to vigorously contest this standing motion and, if standing is granted, the underlying avoidance claims. Furthermore, the Company initiated settlement discussions with SunEdison and certain of SunEdison’s stakeholders to resolve, among other issues, intercompany claims and defenses between the Company and SunEdison. While these settlement discussions have started and there can be no guaranty that a settlement will be reached, the Company believes that a successful settlement could facilitate the Company’s exploration of strategic alternatives. Any settlement would be subject to the approval of the bankruptcy court in the SunEdison Bankruptcy.
Additionally, because our directors’ and officers’ insurance policies covering the period through July 15, 2016, including a number of policies under which SunEdison is the named insured, are shared with SunEdison and TerraForm Power, Inc., the SunEdison Bankruptcy may limit our ability to utilize such insurance to, among other things, cover settlement costs, defense costs, and our indemnification obligations to our directors and officers. In November 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed a motion with the bankruptcy court in the SunEdison Bankruptcy seeking standing to file an action seeking a declaration that such directors’ and officers’ insurance policies were property of SunEdison’s bankruptcy estate, which would have the likely effect of limiting the Company’s access to these policies. If we are required to make settlement payments, cover defense costs or make indemnification payments to our officers or directors in respect of matters covered by our directors’ and officers’ insurance policies covering the period through July 15, 2016, our business, financial condition and results of operations may be adversely affected by the limited availability of directors’ and officers’ insurance. Our directors’ and officers’ insurance policies covering the period after July 15, 2016 are not shared with SunEdison, and we do not expect them to be affected by the SunEdison Bankruptcy.
A sale of SunEdison, or a sale of SunEdison’s ownership interest in us, may result in a significant change in our current business strategy; any such sale could have a material adverse effect on our business, financial condition, results of operations and cash flows.
SunEdison could sell or transfer all or a portion of its ownership interests in us to an unaffiliated third party, including in a merger or consolidation or in a transfer of all or substantially all of its assets, and such sales or transfers may occur during the SunEdison Bankruptcy subject to the approval of the bankruptcy court. If a new owner were to acquire ownership of SunEdison or acquire ownership of SunEdison’s ownership interests in us, including in connection with the reorganization or liquidation of SunEdison in bankruptcy, and appoint new directors or officers of its own choosing, the new owner would be able to exercise substantial influence over our policies and procedures and exercise substantial influence over our management and the types of acquisitions we make. Such changes could result in our capital being used to make acquisitions that are substantially different from our targeted acquisitions and otherwise effect a significant change in our current business strategy.


37