💥"Odd Footing"💥
Sunnova Energy International Inc. + Boundless Broadband LLC File + Prospect Health Update.
Hi folks. We expected to use today’s edition to focus, as we have many times in the past,* on the solar industry because — ⚡️shocker⚡️— Sunnova Energy International Inc. (“Sunnova”) finally reached the end of a “long hard road”** and filed its chapter 11 bankruptcy. It came on the heels of another solar-related filing from Mosaic Sustainable Finance Corporation. Both filed in the great state of Texas, busying the calendars of Judge Perez and Judge Lopez, respectively.
Unfortunately, Sunnova didn’t cooperate: it filed its cases “on odd footing” “to get on with it”*** and the first day hearing yesterday was a bit of a clusterf*ck as a result. Those of you who’ve been paying attention to the news likely noticed that an entity called Sunnova TEP Developer LLC filed on June 1, 2025 — just a good ol’ fashioned ploy to preserve potential preference claims against dealers (read: go ahead and FAFO guys!) — only to be followed an entire week later by three other debtors. Odd, indeed!
Look, Sunnova is an unwieldy beast. It has — and doesn’t have — it all. Let’s start with the latter. It doesn’t have a restructuring support agreement and it doesn’t have a DIP motion.**** On the flip side, it does have an ungodly amount of debt at various entities across a number of facilities; it has hundreds of millions owed to dealers; it has multiple special committees to weigh conflicts; it has a recently commenced sale and marketing process in the very early innings; and it has a f*ck ton of newly unemployed people (700 in the last week and 1k unjobbed YTD) — the unfortunate victims of the secular downtrend afflicting the solar industry. It also has two motions on file to sell assets — one to sell certain solar systems to non-debtor Sunnova TEP Holdings LLC for $15mm and a second to sell its “New Homes Business” to Lennar Homes LLC for ~$16mm — the combined proceeds of which would, when combined with Sunnova’s measly $13mm of cash on hand, fund the first 1.3 hours of counsel Kirkland & Ellis LLP’s services. We kid, we kid … it would bridge the case to a potential DIP (and potential stalking horse purchase?), currently under discussion with an ad hoc group of lenders.
As you can imagine the Office of the US Trustee and several other players had an issue with these no-notice sales. Therefore, there’ll be a follow-up hearing on Wednesday at 5pm CT and so you should expect coverage from us in Sunday’s edition for paying subscribers only.
“Oh, no, but Johnny, I’m not a paying subscriber!”
Guess what folks? There’s an easy fix to that problem👇:
*Like here and here, among others.
**Kirkland & Ellis LLP’s Brian Schartz’s words, not ours.
***Ditto.
****Yet. There is an interested party and we expect to hear more about this later this week.
💥New Chapter 11 Bankruptcy - Boundless Broadband LLC💥
On May 29, 2025, Portland, Maine-based Boundless Broadband LLC, Tilson Middle Street Holdings LLC and Tilson Technology Management Inc. (“TTMI,” and collectively with the two other companies, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Shannon). Through TTMI, the debtors provide digital infrastructure consulting, design-build, and maintenance services specializing in fiber and wireless networks.
The debtors have a unique history; founded in ‘96 by Mike Dow, the debtors grew rapidly following the hiring of US Army veteran, Joshua Broder, in ‘07 as Mr. Broder leveraged his experience building networks with the US Army to expand the debtors’ business into telecom. Mr. Broder ultimately became a controlling shareholder and CEO, creating a culture centered around former military vets who were accustomed to just getting sh*t done. When the whole world was falling apart during the Great Recession in ‘08, the debtors took advantage of the American Recovery and Reinvestment Act (“ARRA”) and embarked on a bunch of infrastructure projects in Maine, including deployment of a federally funded state-wide fiber optic backbone network that ultimately played a huge role in the actualization of grid modernization for Northeastern power utilities.
ARRA funds stopped flowing in ‘12 and the debtors, as opportunistic as ever, transitioned to privately funded projects and started several new divisions to help with wireless carriers’ deployment of 4G and new fiber optic projects. The debtors soon became a large vendor to Verizon Communications Inc. ($VZ)(“Verizon”) and participated in Verizon’s fiber network build out, dubbed OneFiber — a relationship that led to TTMI growing to hundreds of employees just to service the Verizon relationship.
Growth continued from there. During the pandemic, the debtors acquired more and more “long term, sustainable customers” with a good amount of client, service line and geographical diversification. That is, until ‘22, when they started working for a new, very large client, Gigapower LLC (“Gigapower”) — a joint venture between Blackrock Inc. ($BLK) and AT&T Inc. ($T). Gigapower contracted the debtors to design and buildout Gigapower’s fiber networks in Las Vegas and two towns in Arizona. This work represented ~$600mm in contractual backlog at inception, making it the debtors’ largest project to date.
Sounds like a pretty sweet gig right? It was … for a hot minute. Then, according to CRO Richard Arrowsmith in his first day declaration, Gigapower turned shady:
TTMI anticipated the capital uses that the project would present and negotiated a contract with Gigapower that provided for adequate project cashflows and unambiguous parameters around project assumptions and responsibility for changes and delays. Ultimately, Gigapower failed to deliver on nearly all of the terms TTMI negotiated to address the cashflow risks, failed to devote sufficient resources to community communication and management of jurisdiction-imposed costs, and delayed, withheld and reduced payments without contractual basis.
He’s got examples:
“…when the City of Las Vegas ordered Gigapower to partially repave the streets after installation of its fiber, Gigapower failed to engage the city to change its approach. TTMI paid millions to paving subcontractors and even recruited and deployed its own paving crews to meet the city’s demands, despite explicit allocation of the costs of this excess paving to Gigapower in TTMI’s contract. The parties negotiated for eight months, with Gigapower withholding payment to gain negotiating leverage, before Gigapower ultimately agreed to pay these costs on a go-forward basis while strong-arming TTMI into agreeing to additional concessions on costs already incurred.”
Blackrock? A bully? Say it ain’t so??
Ultimately, Gigapower’s withheld cash payments meant the debtors lost nearly ~$109mm in net cash on the Gigapower project.
How did the debtors fill the hole? They took cash from over there and moved it over here. Like, seriously. Back to you Mr. Arrowsmith:
“The net effect of this was devastating to TTMI. The Gigapower project consumed all of the free cash flow that was coming from TTMI’s otherwise healthy adjacent business lines and customer projects, as well as the financed cash from debt and equity sources. The project also impaired the enterprise value of TTMI’s combined businesses and destroyed TTMI’s ability to raise new equity as planned. TTMI was forced to slow payments to its vendors, which impacted its ability to deliver timely for other customers. The impact on employee morale was profound, and TTMI lost valued, long-tenured employees due to both the uncertainty and necessary cost reductions.”
Which brings us to 2H’23. In need of growth capital and a safety cushion should things with Gigapower continue to go south, the debtors raised two rounds of subordinated debt and retained Bank of America Securities (“BofA”) as investment banker to raise $50mm in new equity.* Prior to the Gigapower disputes — LOL, surely you could tell that there were “disputes” on the horizon! — BofA estimated the debtors’ total enterprise value to be between $375mm and $425mm. Once they actually launched the marketing process, however, potential investors balked due to the Gigapower issues and BofA whiffed entirely.
Strike one.
A second attempt to raise a smaller tranche of structured equity in 2H’24 failed for the same reasons.
Strike two.
It was time to explore the debt market again! And it has been the golden age of private credit (in case you hadn’t heard) so, naturally, it made sense to try and tap into all of that cash just sitting there waiting to be deployed. Per Mr. Arrowsmith:
“Without a path to raise equity, TTMI looked to address liquidity through a new senior credit facility with a higher leverage level, launching a process to secure private credit. After a broad process, TTMI selected Citizens Bank as lead arranger for a syndicate of private debt providers and agreed on a draft term sheet that would provide up to 1.5x more EBITDA leverage than its existing facility. Citizens was bullish on the likelihood of success, having successfully placed similar deals recently. The private debt syndication process launched on March 31, 2025….”
Let’s pause here and ask our readers a question: anyone remember what happened in the beginning of April ‘25?
Fine. We don’t have all day. This happened …
… the markets froze and Citizens Bank was unable to pursue the syndication effort.
But all wasn’t lost. The debtors felt confident that — if Gigapower lived up to its contractual obligations — they could persist until the Gigapower contract turned cash flow positive in TTMI’s favor. The debtors’ relationship with the city of Las Vegas was strong, the debt raise was still possible in time, and the debtors and an executed term sheet for a new Series G equity investment to backstop the debt raise. In late Q1’25, Mr. Broder personally provided a $10mm cash infusion via sub note to bridge the debtors to the next step.
Turns out that 👆 was a big “if.” Gigapower effectively pulled the plug in March when it allegedly withheld payments to the debtors and then officially pulled the plug in late March and late April when it terminated “for convenience” construction on all three Gigapower-related project sites. While this meant the debtors had a significant claim — perhaps as much as $115mm! — against Gigapower due to the early termination, there was no immediate cash injection and no hope of any free cash flow coming in from the terminated projects.
Hence, bankruptcy. And, yes, hence another sale bankruptcy. But given how much drama Gigapower has caused, the debtors need some cash first.
And so there’s a $150mm headline DIP, sourced from the debtors’ prepetition secured lenders. The prepetition funded debt includes a $109.6mm revolver, a $37.5mm term loan, and a $22.3mm delayed draw term loan, all under the same prepetition credit facility. Below that there’s also $74mm in subordinated unsecured notes and ~$58mm outstanding in trade debt.** The DIP will roll-up a lot of that, with only $37.5mm of the $150mm being new money ($15mm interim); it carries an interest rate of SOFR+10% along with a closing fee of 1% and an exit fee of 5%, both on the new money portion. The debtors will also have to abide by some milestones that include a June 13 deadline for filing bidding procedures, a June 25 deadline for entering into a stalking horse APA, and a September 19 deadline for the entry of a sale order.
The debtors got all the relevant first-day relief approved at a May 30, 2025 first day hearing*** and we now look towards a second day hearing on June 26, 2025 at 10am ET. Presumably by then we’ll understand whether any prospective buyers see continued potential in this business.
The debtors are represented by Bernstein, Shur, Sawyer & Nelson, P.A. (Lindsay Milne, Adam Prescott, Letson Boots) and Saul Ewing LLP (Evan Miller, Monique DiSabatino, Paige Topper) as legal counsel, Alastar Partners (Richard Arrowsmith) as financial advisor, and Woodward Park Partners, LLC (Andrew Bracy) as investment banker. Bank of America, N.A. is represented by Morgan, Lewis & Bockius LLP (Jennifer Feldsher, David Shim, Jody Barillare, Brian Loughnane) as legal counsel. BMO Bank N.A. is represented by Chapman and Cutler LLP (James Sullivan) and Womble Bond Dickinson LLP (Matthew Ward) as legal counsel.
*The exact language in Mr. Arrowsmith’s declaration is “…TTMI undertook a process to secure equity financing, selecting Bank of America Securities (“BoA Securities”) to serve as its investment banker, with the objective of raising approximately $50 million of primary capital to fund growth, and secondary transactions for legacy shareholders and lenders” which, given the context and the use of proceeds, is a bit curious. Legacy shareholders wanting to cash out isn’t exactly abnormal but it’s also not the best use of these proceeds given the fact pattern.
**Pursuant to their critical vendors motion, the debtors seek to pay $4.7mm on an interim basis and $12.5mm on a final basis to certain parties with critical vendor claims.
***We think. For some reason Delaware is slow to upload the hearing audio from the hearing. We reckon, at a minimum, that Gigapower had some choice words about how it’s been painted so we’ll update the record accordingly when possible.
⚡️Update 3: Prospect Medical Holdings, Inc. ⚡️
Roughly 150 days ago — although it genuinely feels like a lifetime — Prospect Medical Holdings, Inc. (“PMH”) and its 66 direct and indirect subsidiaries (collectively and together with PMH, the “debtors” and together with their non-debtor affiliates, the “company”) plummeted into chapter 11. In that relatively short amount of time, the debtors have managed to run at an astonishing clip of 14.9 docket entries per day, totaling — g-ddamn — 2,205 so far. Like, how? How is that even possible?
Anyway, since our last update …
… the debtors have, at long last and after burning down their Philly-area hospitals, made some actual progress.
Recall our filing coverage, where we noted that the debtors filed with a deal in hand to sell their mostly non-debtor services-based operations known as PhysicianCo — healthcare plans, medical groups, management services — to Astrana Health, Inc. ($ASTH). On May 21, 2025, and after the debtors’ kicked the hearing, Judge Jernigan finally considered and approved the deal. Whenever it closes — the debtors initially targeted sometime this month, but who knows — the estates will net a cool ~$67mm (out of a headline $745mm purchase price), which’ll help pay off some prof fees. Sadly, that’s not much of a joke because, through April 30, 2025, the debtors have racked up $44.4mm minimum in estate expenses, plus whatever they owe lender advisors under the two DIPs.*
Getting back on topic, at the same hearing, the debtors also announced a settlement in principle of beef with non-profit Foundation of Delaware County (PA)(the “Foundation”) flowing from the Philly hospital misadventures, pursuant to which (i) the Foundation will reclassify a $2.7mm+ asserted administrative claim as a prepetition GUC claim and cooperate with the debtors as they seek to gain info from insurer Cassatt Insurance Company, Ltd. (“Cassatt”), which the debtors believe will aid in bringing another $30mm into the estates, (ii) the debtors will agree not to seek clawback of postpetition amounts paid to the Foundation, and (iii) the Foundation and the debtors will establish a program to mitigate the impact of the closures and, obviously, release each other from liability.** Unfortunately, that’s where the detail ends; a full 2.5 weeks later, the 9019 motion and agreement have yet to hit the docket. Fingers crossed, we suppose, because wouldn’t it be grand not to be litigating against a community-focused non-profit?
While they had the court’s attention, the debtors also hinted that a chapter 11 plan and disclosure statement were forthcoming, and a couple of days later, on May 23, 2025, those were actually filed. We, uh, wouldn’t call ‘em fully-baked.
Clearly, there are deets to be hashed out, but generally, the debtors are envisioning a not-too-complicated liquidation that creates a GUC trust to pursue litigation claims, funded with $10mm from the proceeds of the debtors’ sales.
Speaking of sales, the debtors have also begun discarding the rubble that remains in Pennsylvania. On May 29, 2025, they filed a notice that their ambulatory surgery centers and imaging sites had been sold to Christiana Care Health System, Inc. for $50.3mm. Next up, hospital real estate. For that, they tapped Keen-Summit Capital Partners LLC (Matthew Bordwin, Harold Bordwin, Chris Mahoney) to serve as real estate broker. And while there are no dates set, if you’re in the market for a hospital or the land it’s on, give ‘em a shout.
Roundabouts there is where the “success” ends. Unlike PA, the debtors’ California and Connecticut sale processes appear to have stalled out or at least been prolonged. On June 6, 2025, the debtors filed a notice kicking the bid deadline, auction, sale hearing, and related milestones out … *checks notice* … indefinitely. They’ll holler when new ones have been picked.
Which is pretty unfortunate because the results of the CA “… effort will determine, in large part, the success of these chapter 11 cases.” Or at least that’s what the debtors argued in response to the California Department of Health Care Services (“DHCS”), after it filed a motion to compel the assumption or rejection of their provider agreements on May 9, 2025. DHCS’s gripe? The debtors keep sending in reimbursements and have been paid $8.7mm since January 1, 2025 but haven’t held up their end of the deal, skipping out on at least $61.1mm in fees owed back to DCHS to fund California’s Medicaid program, which provides low-income children and adults with medical services and health insurance (🤦).
And, of course, there’s the hospital closure fallout …
… which resulted in ~2,500 employees getting kicked to the curb, effectively overnight. On May 2, 2025, Amanda Cannavo, represented by Raisner Roupinian LLP (Jack Raisner, René Roupinian) and Otteson Shapiro LLP (John Leininger), set off to make things right (or marginally less wrong) by filing a class action adversary complaint against the debtors for WARN Act violations.***
The next hearing is later today, Tuesday, June 10, 2025 at 1:30pm CT, at which the court will consider DCHS’s motion, as well as a KEIP motion filed by the debtors. The amounts under it are all but de minimis if the ASTH sale closes according to plan — about $150k — but the creditors’ committee was worried about that “according to plan” bit and PhysicianCo honoring its obligations, so it filed a limited objection necessitating a hearing.****
Further down the road, on June 24, 2025, the court has set aside time to consider approval of the DS. But y’all saw those placeholder recoveries, right? And the uncertainty around the CA and CT sales? We’re not holding our breath that one sticks.
*Of that figure, $15.8mm goes to Sidley Austin LLP as the debtors’ counsel, $11.4mm to Alvarez & Marsal North America, LLC as the debtors’ CRO and financial advisor, $4.2mm to Houlihan Lokey Capital, Inc. ($HLI) as the debtors’ investment banker, $2.1mm to Katten Muchin Rosenman LLP as the debtors’ special counsel, $6.8mm to UCC counsel Paul Hastings LLP, and $2.2mm to UCC FA Province, LLC. The rest is attributable to various other advisors and the patient care ombudsman.
**The court also granted the debtors’ request to (i) conduct rule 2004 discovery on Cassatt and (ii) establish mandatory claims resolution procedures for pre-petition professional liability and general liability claims asserted against the debtors or their employees.
***The debtors haven’t made the adversary docket available on the claims agent website, but we’ll guess not much has happened given how slowly those complaints creep along.
****The headline figure is actually $3.5mm, but payments are reduced, dollar-for-dollar, by payment incentives related to the ASTH sale.
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
📤 Notice📤
Brian Shaughnessy (Partner) joined Herbert Smith Freehills Kramer (f/k/a Kramer Levin) from Togut Segal & Segal LLP.
Kyle Ortiz (Partner) joined Herbert Smith Freehills Kramer (f/k/a Kramer Levin) from Togut Segal & Segal LLP.