Verengo Solar Inc. of Torrance, once the third-largest solar rooftop panel installer in the nation, has filed for Chapter 11 bankruptcy protection, the victim of an overambitious expansion to the East Coast.
As part of the bankruptcy filing last month in Delaware, Verengo announced a plan to sell its assets to Crius Solar Fulfillment of Norwalk, Conn., though that was presented to the bankruptcy court as a stalking-horse bid that sets the bar for any other offers that might come. A final decision is not expected on a sale until the end of the year.
Verengo Chief Executive Dan Squiller said no job cuts are anticipated and that operations for its 20,000 customers would go on as before during the bankruptcy and sale process.
“Bankruptcy may be a scary word to a lot of people, but I want to reassure our customers that they won’t be victims of reduced service or warranty issues,” he said.
In the bankruptcy filing, Verengo listed both assets and liabilities in the $10 million to $50 million range. Squiller said the liabilities are closer to $50 million and the assets are closer to $10 million.
Crius Energy Trust, the Toronto company that has a controlling stake in Crius Solar, said the Verengo assets are valued at $11.9 million.
Verengo, co-founded in 2008 by Randy Bishop and Ken Button, quickly raised money from L.A. private equity firm Angeleno Group, ClearSky Power & Technology Fund – the venture arm of NextEra Energy of Juno, Fla. – and other investors. In just three years, it grew to be the second-largest solar panel installer in California, behind SolarCity of San Mateo.
But then, Squiller said, Verengo fell victim to the expansion fever that gripped the solar rooftop panel industry about five years ago. Specifically, Verengo launched a cross-country expansion, opening offices in New Jersey, New York state, and Connecticut.
Squiller, who took the top job in February, said the company vastly underestimated the resources it needed for the expansion push.
“The company didn’t have the infrastructure and the capability to conduct solar installations in a profitable manner,” he said.
What Verengo was trying to do was extremely difficult to pull off, said Nicole Litvak, senior solar analyst with Green Tech Media in Boston.
“Not too many companies besides SolarCity and Sunrun have been able to make the jump from being a regional-statewide player to a national player,” she said. “You have to understand the local markets; there are different economics and ground rules in each region.”
In February of last year, Verengo sold off its Northeastern U.S. operations to NRG Energy of Princeton, N.J., for an undisclosed price.
“We were still left with millions of dollars in debt, even after the sale,” he said.
About that time, co-founders Bishop and Button left Verengo after trying unsuccessfully to sell the company a year earlier.
