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Sunday, 19 March 2017 15:39

Patriot Solar files for Chapter 11 bankruptcy amid dispute with key customer

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Patriot Solar Group filed for bankruptcy after a key customer, Vanguard Energy Partners, failed to pay the company for work completed on four large-scale solar energy projects in Massachusetts. Patriot Solar Group filed for bankruptcy after a key customer, Vanguard Energy Partners, failed to pay the company for work completed on four large-scale solar energy projects in Massachusetts. Courtesy Photo

ALBION — A dispute over several large-scale solar energy projects forced a Southwest Michigan solar equipment manufacturer into bankruptcy earlier this month. 

Patriot Solar Group LLC filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the Western District of Michigan on March 7. In the court filings, the company claimed that Virginia-based Vanguard Energy Partners LLC failed to pay it $1.1 million related to four solar installation projects.

Those disputed payments ultimately drive an otherwise profitable manufacturer of solar panel racks and mounting equipment to declare bankruptcy, Patriot Solar founder Jeffery Mathie said in the court filings. 

“[Patriot Solar Group] was harmed significantly when Vanguard Energy Parterres [sic] LLC failed to pay the amounts due on various projects in the amount of $1,144,153.50,” Mathie said in a filing. “I firmly believe that absent this event the debtor would not be in need of Chapter 11 protection and despite Vanguard’s unjust refusal to pay the debtor will be able to emerge from Chapter 11.”

For its part, Vanguard disputes those acquisitions and alleges that Patriot Solar caused approximately $3.5 million in damages by failing to install its products in the arranged time period. 

The kerfuffle stems from four projects scattered throughout Massachusetts, which Patriot Solar agreed to supply in late October 2016. In each project, Patriot Solar alleges Vanguard caused multiple delays, preventing them from being completed on time. 

Specifically, Patriot Solar said Vanguard severely delayed returning a signed subcontractor agreement during each project, which prevented the manufacturer from beginning work on time. Other delays stemmed from Vanguard’s failure to perform the necessary site work ahead of time and to gather some of the required permits.

Earlier this month, Patriot Solar also filed a civil complaint regarding the non-payments in a Commonwealth of Massachusetts trial court. 

Patriot Solar estimates it has liabilities between $1 million and $10 million and assets valued at between $1 million and $10 million on its balance sheet, according to court documents. 

Huntington National Bank is the company’s sole secured creditor, holding approximately $1.2 million in mortgages. 

Patriot Solar’s list of unsecured creditors in West Michigan includes Paragon Die & Engineering ($125,000), Sinclair Designs & Engineering ($121,000), Shape Corp. ($100,000), Cascade Engineering ($48,000), Damron Bros. Asphalt ($34,000) and Richmond Agency ($29,000).

Despite filing for bankruptcy, Patriot Solar expects to remain profitable this year. 

The company generated annual sales of approximately $10.3 million in 2016, according to court documents. 

While he declined to speak specifically about the Patriot Solar case, Shelbyville-based Solar Winds Power Systems LLC owner Mike Linsea said companies in the solar energy industry can easily get in over their heads with large-scale projects.

“They get into these great big jobs and you get strung out over these big jobs and then you’re caught in a bad situation,” said Linsea, whose company installs solar systems for residential and commercial customers. 

To prevent that, Linsea said his company relies on a diversification strategy to prevent it from sourcing too much work from any one customer. 

EARLY PLANS

Patriot Solar originally formed in the late 2000s as an offshoot of Patriot Antenna Systems, which Mathie also owned at the time. In 2007, Patriot Antenna Systems sold to Cobham Plc, an aerospace manufacturer based in the United Kingdom, which ultimately chose to divest the company’s solar business in 2009. Mathie then purchased the assets of Patriot’s solar business and formed Patriot Solar Group, according to reports.

The company appeared to have had lofty ambitions in its early days. In 2011, Patriot Solar received tax credits from the former Michigan Economic Growth Authority for its plans to invest $3.9 million in a 300,000-square-foot manufacturing facility, according reports published at the time. The company expected to create roughly 200 jobs by 2017 as a result of the expansion. 

Despite those growth plans, Patriot Solar has grown its workforce in Albion from 13 workers in 2011 to 17 employees today, according to reports and the recent court filings. The status of the company’s manufacturing facility remains unclear. 

Mathie acknowledged a request to comment for this report, but was unavailable as this edition went to press.

Vanguard Energy Partners did not respond to multiple requests for comment. 

Kalamazoo-based law firm Rayman & Knight is representing Patriot Solar in the case. 

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John Wiegand

Staff writer

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