Solar Trust wins court approval of Blythe project settlement with MMR

By Jim Witters

Wilmington, Del., June 4 - Solar Trust of America, LLC received court approval on June 1 for a settlement with MMR Group Inc., which asserted half ownership in the debtors' Blythe, Calif., solar energy projects, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

The settlement "removes the cloud of uncertainty" that MMR's claim created in the proposed sale of Solar Trust's assets, the company said in its motion for approval of the agreement.

"Such uncertainty may well have had a chilling effect on the bidding process in connection with the debtors' proposed sale of their assets, thereby reducing the amount of sale proceeds to the detriment of the debtors, their estates and creditors," the motion states.

Under the terms of the agreement, MMR will receive $125,000 within five days of a Chapter 11 plan effective date and an allowed claim of $750,000.

In exchange, MMR agreed not object to the proposed sale of the debtors' assets and to withdraw its existing objections after receiving its payment.

Dispute background

As previously reported, MMR sued Solar Millennium LLC, Solar Trust's parent company, in Louisiana state court in January 2010. In March 20111, the case was transferred to the U.S. District Court for the Northern District of California.

That case was resolved under a settlement agreement, according to court documents.

On May 1, MMR instituted an adversary proceeding against Solar Trust asserting that a joint venture existed between MMR and the debtors for the construction of solar energy projects in the Southwest.

MMR claims 50% equity interest in "the alleged joint venture that owns the PG&E Blythe Project, the SCE Blythe Project and other projects," with the other 50% held in trust for MMR. In the alternative, MMR claims Solar Trust owns only 50% of the equitable interests in those projects, with the remainder held in trust for MMR.

MMR asserted that its 50% stake in the projects are not the property of the debtors and cannot be included in the debtors' bankruptcy estates.

Solar Trust, an Oakland, Calif.-based unit of solar company Solar Millennium AG, filed bankruptcy on April 2 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-11136.

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