Text by Yi Qingxiao
The world is a stage, and sometimes real-life drama is more riveting than scripted fiction. The story of Suntech Power CEO Shi Zhengrong, once crowned “Solar King” as a renowned figure in China’s new energy development, has enough twists and turns to inspire envy in the best of dramatists. In less than a decade, Shi skyrocketed from an everyday entrepreneur into the richest man in the country before dramatically falling back to the brink of bankruptcy. On March 20, 2013, Wuxi Suntech, the primary unit of the Suntech Power, a major producer of solar panels, was ordered into “bankruptcy reorganization” by Wuxi Intermediate People’s Court.
For Shi, the hard times had started long before. In August 2012, Suntech was already drowning in debt and on the verge of bankruptcy due to a massive surplus of photovoltaic (PV) products in the world market, fierce competition driving prices to rock bottom, “anti-dumping duties” imposed by the U.S. government on Chinese PV imports, and the company’s own internal management problems. In March of 2013 alone, the company’s matured debt reached 4.5 billion yuan.
The firm’s choices are limited: Let Wuxi Suntech go bankrupt but keep auxiliary companies afloat, have its core asset, Wuxi Suntech, file for bankruptcy protection and restructure before being totally or partially absorbed into Wuxi Guolian Development (Group) Co., Ltd., or avoid bankruptcy by borrowing even more to buy time for the company to pay off the debt while cutting costs. Wuxi Guolian is a state-owned enterprise under Wuxi Municipal State-owned Assets Supervision and Administration Commission, and one investor responsible for Suntech’s US$8 million in seed money during its startup.
The second option has proved most popular with stakeholders. Contrasting liquidation, restructuring is akin to a rescue that “brings the company back to life, reviving its ability to meet its liabilities to creditors.” Wuxi Intermediate People’s Court has organized a bankruptcy management team, a temporary task force composed of members from a third-party accounting firm and legal and government organizations, and the new team has started work at Suntech.