Workers from SolarZero protesting outside BlackRock's Auckland office last Friday. Liquidators says it's still too early to say if there will be funds to pay secured creditors. Photo / Dean Purcell
Workers from SolarZero protesting outside BlackRock's Auckland office last Friday. Liquidators says it's still too early to say if there will be funds to pay secured creditors. Photo / Dean Purcell
The first liquidators’ report, released late Tuesday, revealed SolarZero collapsed owing at least $40 million to more than 700 creditors, including 173 staff owed $4.9m in holiday and notice pay.
There was also a ray of hope. The liquidators said since their appointment they have received expressions of interest from parties seeking to buy all or part of the SolarZero business.
Some 15,500 Solar Zero customers have been protected with most of their 25-year, no cash-up-front, pay-per-month contracts being securitised as debt held by two special-purpose vehicles, was placed in Public Trust control shortly before the liquidation.
SolarZero liquidators have moved to seize solar panel stock from contract installers.
“But some of our members are saying ‘We won’t relinquish stocks’,” Master Electricians chief executive Alexandra Vranyac-Wheeler told the Herald.
The hardware could be held hostage until SolarZero - or the liquidators now in control of the BlackRock-ownedfirm - paid out.
And for panels that have already been attached to customers’ roofs, some Master Electricians are threatening, “I’m going to go uninstall them if I haven’t been paid for the installation”, Vranyac-Wheeler says.
Some 173 (now ex) SolarZero staff are both preferred creditors (for $1.8m) and unsecured creditors (for a further $3.1m) due to a Companies Act 1983 per-employee cap of $31,820 on preferential claims for holiday and notice-period pay. Photo / Dean Purcell
Her advice to members: Cool your jets. The Master Electricians’ boss said she appreciated her members’ anger, but had also told them to act ethically.
Master Electricians had sought legal advice, which came through last night. “In short, members must notify the liquidators of any [SolarZero] equipment they hold so the liquidator can arrange for it to be picked up. It cannot be held back as a means of ensuring payment from the liquidators.”
Some $4.1m is owed to trade creditors, the first report says.
Her members had to appreciate that SolarZero operated on a separate model. Usually, an installer would buy solar panels and batteries from a wholesaler. With SolarZero’s model, the firm retained ownership of the hardware through the life of the customer’s 25-year contract.
Vranyac-Wheeler said 15 former installers for SolarZero who were Master Electricians have come forward - including Laser Electrical overnight. The amount owed to the industry group’s members was at least $118,000.
She said SolarZero customers had been looked after, but contractors had been left hanging.
“Two non-members have also come forward. One is owed $70,000 who will probably have to fold his business,” she said.
Vranyac-Wheeler said she would approach the Government about co-operating on a “retentions fund” or “rainy day fund” to aid small businesses in such collapses. She said a small levy on cable sales would be one potential way to fund it.
A work in progress
The first report by liquidators Russell Moore and Stephen Keen revealed, as expected, that they were still in the process of getting a full picture of the amounts owing amid a complex structure involving multiple SolarZero entities and tens of millions in intra-company loans. So far they have found just over $40 million due secured and unsecured creditors.
The Inland Revenue Department and staff are near the front of the queue as preferred creditors.
Outstanding taxes don’t figure in their first report, but Moore and Keen wrote: “We anticipate there will be amounts owing to the IRD once the pre-liquidation returns are filed”.
The liquidators say they are aware of 173 preferential claims totalling $1.8m, “representing holiday pay owing to employees for accrued entitlement”.
Their report also notes unsecured employee claims of $3.1m, due to a per-employee cap of $31,820 on preferential claims.
The Government’s NZ Green Investment Fund, which extended a $145m credit line to SolarZero - $115m of which had been drawn down by the time of the liquidation - is listed as the only secured creditor so far.
NZGIF is the primary beneficiary of one of the two special purpose vehicles holding the securitised debt - on the face of things affording it a measure of protection as the liquidators continue to assess the group’s commercial set-up.
The report lists 598 unsecured creditors, who have until January 15 to prove their debt claims.
Buyer interest
The report says at this stage it is unknown if there will be sufficient funds to meet secured claims in full, but it does not paint a promising picture.
SolarZero’s primary assets - its solar panels and batteries (mostly bought from China’s JA Solar and Japanese firm Panasonic, listed as creditors) - are installed at 15,000 homes and the 25-year customer contracts associated with them were securitised as debt held by two special purpose vehicles (SPVs), which were placed under Public Trust control shortly before the liquidation. The SPVs are not in liquidation.
The first report says: “The Liquidators understand that SZL [SolarZero Limited] had underwritten certain aspects of the securitisation, resulting in unsustainable regular payments to the SPVs.”
“Accordingly, these assets are not available to meet the claims of creditors,” the first report says.
The available assets - including some $3.6m in solar panel stock, which the liquidators are in the process of retrieving from installers - and $22,275 in cash in the SolarZero group’s bank accounts - are modest.
At this point, the creditors’ best hope could be a sale of the business - which is potentially on the cards.
“Since the appointment, we have received expressions of interest from parties seeking to buy all or part of the SolarZero business.
“We are keeping an interested-parties register, and we are working to develop options for a possible sale with all other stakeholders and Verofi [the firm named as the standby customer contract servicer shortly before the liquidation].”
The liquidators are also investigating whether SolarZero’s intellectual property is saleable - including its “proprietary solar communications apps” and its “virtual power plant” technology, developed in-house, that allowed multiple customers to sell surplus power back to the grid - as they did during the March 10 cold snap.
Never made a profit
Any buyer will have to engineer a turnaround.
The report reveals for the first time the amount that US private equity giant BlackRock paid for SolarZero in mid-2022 - $110m - and that BlackRock vehicle GRPIII injected significant additional capital to the group since its 2022 acquisition, totalling $147.8m in addition to the purchase price. Separately, BlackRock has told the Herald it did not take any funds out of the business.
It adds: “Operationally, the group was not able to generate profit, nor did it reach break-even”.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
