Wuxi Suntech Power Holdings has been pulled into bankruptcy after eight Chinese banks filed for insolvency and restructuring of the company’s main solar manufacturing unit. This comes after the Suntech Power share price plummeted and the company failed to pay $541 million to bond holders last Friday, 15th March.

Suntech has not declared a profit since the first quarter of 2011, after which time it started to show great losses. “It’s truly the end of an era,” said Jenny Chase, lead solar analyst at Bloomberg New Energy Finance in Zurich. “For years, it was the world’s biggest solar manufacturer.”

Suntech Power is hoping that the court proceedings in Wuxi will help the company restructure its debt and liabilities. With the Wuxi factory being its main manufacturing unit producing around three quarters of its stock, Suntech is still hoping to fulfil its customer orders. According to Suntech’s last annual report, Wuxi can account for 1200 megawatts of their 1800 megawatt total capacity.

According to Bloomberg, Suntech’s corporate parent is incorporated in the Cayman Islands, and the unit in insolvency is a Chinese company. It has additional cell and module production in Wuxi, Shanghai and Luoyang.

Many believe that the Chinese Government may intervene and help the company out of the very deep hole of debt they currently find themselves in, especially considering the almost 10 000 locals it employs. It is rumoured that the company is suffering from around $2 billion worth of debt. As yet, the government has not stepped in but Suntech has appointed a government official as its president through the court proceedings. This says that the company may be able to restructure and reform as a partly state owned company.

However, with the over production and low profit margins, many solar panel manufacturers are producing units and are almost unable to sell them. The forecast is that we will see many companies going into bankruptcy this year and possible mergers. “The whole PV industry is downsizing. It is regrettable that the company went bankrupt, but it is a common market phenomenon,” said an official with the National Development and Reform Commission.

Keep an eye on this space. We will bring more updates as and when they come to hand.