Sunnova’s discussions with lenders are largely focused on restructuring via a Chapter 11 bankruptcy, according to 9fin sources.

And the negotiations require an intricate negotiation between just two main constituencies: The warehouse lenders led by the Apollo-owned asset-backed specialty lender Altas SP Partners, who are working with Kramer Levin, and the group of corporate creditors organized with Paul Weiss and Evercore, led by Oaktree Capital Management, sources said.

Oaktree built up a position this year comprising several hundred million dollars of Sunnova’s secured bonds and convertible notes, while Apollo has been involved since the creation of Atlas from the carve-out of Credit Suisse’s structured credit group in 2023. Atlas has since grown its exposure to and involvement in the structured financing for Sunnova — with potentially $1.4bn or more of exposure through the warehouse revolvers.

The solar panel company pivoted away from out-of-court financing solutions with JP Morgan and Baker Botts after obtaining an insufficient $185m term loan on 2 March via KKR Credit Advisors that limited its ability to do a larger ABS financing. Shortly after, Sunnova’s CEO and founder John Berger abruptly resigned on 9 March. The company has now turned to Moelis and Kirkland & Ellis, with the assumption among parties involved that this was no longer a discussion between the company and lenders about an out-of-court solution — and that the role of the company’s advisors was to facilitate intercreditor negotiations.

On 11 April, the board appointed new independent directors that have managed large bankruptcies: Jeffrey Stein, a frequent CRO in bankruptcies including Rite Aid; and Tony Horton, relevantly who has served on the board of the restructured Talen Energy, and before that as a long-time executive at EFH who took part in the 2014 bankruptcy of the Texas utility, which is among the largest corporate bankruptcies of all time.

Restructuring options

Sunnova is under immediate pressure to reach an agreement with creditors. Atlas has given it until 21 April to complete a takeout transaction or refinancing for nearly all of the solar loans under its EZOP revolving credit facility and generally take actions to ensure the robustness and bankruptcy-remoteness of its securitization structures. It’s also under a grace period until 30 April to make deliberately missed interest payments on its $400m of unsecured notes due 2028.

The corporate debt is structurally subordinated to the securitization facilities. The KKR facility — secured by Sunnova’s residual equity interests in largely all of its securitization structures — sits somewhere in between the corporate debt and the securitization debt in terms of priority.

A source familiar said that a possible restructuring option could include an orderly wind up scenario where the company just funds enough to keep servicing going so that the existing securitization stacks survive, while the corporate creditors get their respective returns by keeping those stacks alive and out of rapid amortization.

Another possible scenario would be to do that plus invest enough capital to start originating assets again, but that would be a function of how much of a hole there is, sources also said.

With subsidies for loan structures that enabled customers to borrow cash to purchase solar panels now disappearing, the more profitable model has shifted towards leasing — where the project company retains ownership — or power purchase agreements, which are often given easements like a commercial tax credit.

Apollo’s ties to Sunnova

Apollo, through its affiliates, is the majority shareholder of Atlas and serves as a long-term capital partner for the structured credit business, alongside additional third-party capital partners.

Apollo’s insurance arm Athene has an equity investment in Atlas and as of 31 December 2024 held $3.2bn of available-for-sale securities issued by Atlas. Athene also held $724m of reverse repo agreements issued by Atlas as of December 31 and has commitments to make additional investments in Atlas of $3bn.

Atlas is explicitly the lender providing Sunnova financing under the TEPH and EZOP facilities, which as of 2024 year-end, had $1.168bn and $166.6m outstanding, respectively. On 20 March, the company announced that Atlas gave it an extension on the default through 21 April under the EZOP facility but reduced the additional commitments to $0. At the time, the amount outstanding had increased slightly to $172m.

Atlas, Sunnova and Oaktree declined to comment. Kramer, Kirkland, Moelis and have not responded to request for comment by press time.

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