Solar Trust seeks court approval of settlement with MMR Group

By Jim Witters

Wilmington, Del., May 29 - Solar Trust of America, LLC is seeking court approval of an agreement with MMR Group Inc. to settle claims in which MMR asserted half ownership in the debtors' Blythe, Calif., solar energy projects, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Under the terms of the proposed agreement, MMR would receive $125,000 within five days of a Chapter 11 plan effective date and an allowed claim of $750,000.

In exchange, MMR will not object to the proposed sale of the debtors' assets and will withdraw its existing objections after receiving its payment.

"The settlement agreement also removes the cloud of uncertainty with respect to whether the debtors' assets are subject to a constructive trust in favor of MMR; such uncertainty may well have had a chilling effect on the bidding process in connection with the debtors' proposed sale of their assets, thereby reducing the amount of sale proceeds to the detriment of the debtors, their estates and creditors," Solar Trust's motion states.

No hearing has been scheduled to consider the motion.

Dispute background

MMR sued Solar Millennium LLC, Solar Trust's parent company, in Louisiana state court in January 2010. In March 20111, the case was transferred to the U.S. District Court for the Northern District of California.

That case was resolved under a settlement agreement, according to court documents.

On May 1, MMR instituted an adversary proceeding against Solar Trust asserting that a joint venture existed between MMR and the debtors for the construction of solar energy projects in the Southwest.

MMR claims 50% equity interest in "the alleged joint venture that owns the PG&E Blythe Project, the SCE Blythe Project and other projects," with the other 50% held in trust for MMR. In the alternative, MMR claims Solar Trust owns only 50% of the equitable interests in those projects, with the remainder held in trust for MMR.

MMR asserted that its 50% stake in the projects are not the property of the debtors and cannot be included in the debtors' bankruptcy estates.

Solar Trust, an Oakland, Calif.-based unit of solar company Solar Millennium AG, filed bankruptcy on April 2 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-11136.

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