LDK Solar files Chapter 15 bankruptcy; three U.S. units in Chapter 11

By Caroline Salls

Pittsburgh, Oct. 22 – LDK Solar Co., Ltd. filed a Chapter 15 bankruptcy case on Tuesday in the U.S. Bankruptcy Court for the District of Delaware to gain recognition of its foreign proceedings in the Grand Court of the Cayman Islands, and three of the company’s U.S. subsidiaries filed Chapter 11 bankruptcy cases to implement a prepackaged plan of reorganization.

The Chapter 11 debtors are LDK Solar Systems, Inc., LDK Solar USA, Inc. and LDK Solar Tech USA, Inc.

The company said the U.S. debtors launched a solicitation on votes on the prepackaged plan from holders of LDK Solar’s 10% senior notes due 2014 as guarantors of those notes.

The senior noteholders “voted overwhelmingly in favor of accepting the prepackaged plan,” according to a company news release.

In addition to recognition of the foreign cases, the company is asking the U.S. court to enforce the automatic stay against creditor actions that is imposed by the bankruptcy filing.

A provisional stay was granted on Wednesday. A final hearing, as well as a hearing on recognition of the foreign cases, is scheduled for Nov. 21.

Scheme, plan terms

Under LDK Solar’s scheme of arrangement, senior noteholders, preferred shareholders and ordinary scheme creditors will receive a cash-out amount and/or non-cash scheme consideration in exchange for their claims.

Meanwhile, under the Chapter 11 debtors’ prepackaged plan of reorganization, administrative expense claims and priority tax claims will be paid in full in cash, and priority non-tax claims, secured claims, general unsecured claims, intercompany claims and interests will be reinstated.

Also under the prepackaged plan, holders of senior note guarantee claims will receive a scheme senior notes consideration, consisting of equity interests in the parent company in an amount equal to 8.736% to 15% of the claim, calculated at a price of $1.586 per equity unit, and 2018 convertible bonds equal to the remainder of the claim amount or, if there is enough cash, up to 10% of the claim in cash.

As previously reported, class meetings of scheme creditors of LDK Solar and its LDK Silicon & Chemical Technology Co., Ltd. and LDK Silicon Holding Co., Ltd. subsidiaries approved the company’s Cayman Islands and Hong Kong schemes of arrangement earlier this month.

Scheme sanction hearings are scheduled for Nov. 6 in the Cayman court and Nov. 7 in the Hong Kong court. The Chapter 11 plan confirmation hearing is scheduled for Nov. 21.

Debt details

According to court documents, LDK had $510 million in assets and $1,127,000,000 in debt as of May 31.

The Chapter 11 debtors’ largest unsecured creditors are

• The Bank of New York Mellon of Hong Kong, with a $284.73 million claim for the company’s RMB-denominated, dollar-settled senior notes due 2014;

• LDK Solar International Co., Ltd. of Jiangxi, China, with a $27.37 million intercompany claim;

• China Development Bank Jiangxi Branch, with a $17.91 million project financing claim;

• Munich Reinsurance Co. and Great Lakes Reinsurance (UK) plc, with a $14.4 million judgment claim; and

• China Development Bank Hong Kong Branch, with an $11 million share pledge agreement and financing agreement claim.

The Chapter 11 debtors and Chapter 15 debtor are represented by Young, Conaway, Stargatt & Taylor, LLP.

LDK Solar is a manufacturer of photovoltaic products based in Xinyu City, China. The Chapter 15 case number is 14-12387. The U.S. subsidiaries’ Chapter 11 case number is 14-12384.

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