Dive Brief:
- Sunnova, the second-largest installer of third-party owned residential solar installations by market share, filed for chapter 11 bankruptcy on Sunday.
- Although the company’s customer base and revenues continued to grow, rising interest rates, inflation, tariffs and other factors had eroded the company’s profit margins, rendering it unable to pay its debts, president and CEO Paul Mathews said in the bankruptcy filings.
- Sunnova plans to sell off “substantially all” of the company’s assets and wind-down any remaining operations following the sale, Mathews said.
Dive Insight:
Sunnova indicated in a Monday announcementfollowing the filing that it will accept bids on its assets and business operations for the next 45 days; after the sale, the company plans to wind-down any remaining operations and close, Mathews said in court filings.
The company has already agreed to sell some assets to a holding company that has received $15 million in financing from global investment firm ATLAS SP Partners, and has also agreed to sell other assets from its new homes business unit to builder Lennar Homes for $16 million, according to the company announcement.
“Today’s actions mark a critical step towards securing a value-maximizing outcome for Sunnova’s stakeholders,” Mathews said in a statement Monday. “Throughout this process, maintaining continuity of service for our customers is our top priority as we work to secure a long-term solution for our business operations under new ownership.
Matthews said he was “incredibly grateful to our dedicated Sunnova team for their hard work and commitment. We have built an innovative power provider, and I continue to believe deeply in the future of our industry and the promise of residential solar and storage.”
According to the chapter 11 bankruptcy filings, the Sunnova faced “critically tight liquidity” and expected to run out of cash this April or May if they were unable to secure additional financing. However, the company’s efforts to find new lenders earlier this year were unsuccessful, a failure Mathews partially attributed in court documents to uncertainty created by Trump’s executive order to freeze spending authorized by the Inflation Reduction Act.
Although the courts have paused the implementation of that executive order and restored payouts under the act, the uncertainty it created meant lenders were unwilling to provide Sunnova with additional financing, Mathews said.
He also said that although Sunnova grew its revenues and quadrupled its customer count between 2020-2024, market factor such as above-target inflation, prolonged high interest rates, and tariffs had diminished the company’s profitability.
The company attempted to cut costs and free up funds to make its growing debt service payments by focusing on lower-risk installations, and by 2025 had shrunk year-over-year net losses by more than 10%, Mathews said. The company also installed new leadership, including Mathews, and laid off 50% of its workforce earlier this year.
However, the new strategy was unable to make up for its previous policy of aggressive spending and borrowing in pursuit of rapid growth. By early 2025 the company was unable to pay its dealer network, which caused its contractors to stop work on projects that were in process and further curtailed the company’s incoming cash flows, Mathews said.
