Solar Firm Lumio Files for Bankruptcy After ‘Sharp Decline in Demand’

Solar energy firm Lumio filed for Chapter 11 bankruptcy after getting caught up in a “severe liquidity crisis” following a fall in market demand.
The Utah-based company made the filing at the U.S. Bankruptcy Court for the District of Delaware to “complete a value-maximizing sale process and strengthen its financial position,” according to a Sept. 3 statement. The company has already entered into an agreement with an affiliate of White Oak Global Advisors, which has agreed to buy “substantially all” of the firm’s assets for $100 million in a credit bid. In the case the bid is successful, White Oak also intends to provide “significant equity ownership” to Lumio employees.
“The company anticipates completing the sale process in less than two months. During the sale process, the company’s operations will continue as usual without interruption,” the statement said.
In a court declaration, Jeffrey T. Varsalone, a Lumio board member, said the company has faced a “severe liquidity crisis” over the past year, which he attributed to “a sharp decline in demand in the solar market and various macroeconomic headwinds.”
Varsalone blamed increases in inflation and a subsequent jump in interest rates to have resulted in “reduced demand across the entire solar power industry,” thus negatively affecting Lumio’s financial performance.
The reduced demand and revenue eventually led to the deterioration of Lumio’s liquidity position, the board member said.
White Oak has provided Lumio with $8 million, which is expected to support the company’s operations as the sales process proceeds.
“Today’s announcement marks an important step forward for Lumio and a continuation of our deliberate efforts to position the business with the strategic, operational, and financial foundation to operate at the forefront of the solar industry as it enters its recovery phase,” Lumio CEO Andrew Walton said.
The company had announced in April that it would lay off around 1,000 employees to transition to a “low fixed-cost model.” The firm said the solar market had been “slower to recover” than it initially expected.
In February, solar installer Sunworks and three subsidiaries ceased operations and filed for bankruptcy.
According to a post by Solar Insure, a provider of solar-monitoring and warranty-protection services, there have been more than 100 solar bankruptcies in 2024 alone, a number “unseen before” in its “almost 20 years in the solar sector,” the company said.
The firm blamed factors such as high interest rates and borrowing challenges faced by solar companies for contributing to the bankruptcies. High rates make borrowing expensive, discouraging customers from installing solar devices. The rise in rates boosted the cost of capital for businesses, affecting their financial situation.
“Smaller contractors, in particular, struggled to absorb these increased costs, lacking the financial buffers of larger firms. This disparity led to a disproportionate impact on these smaller players, many of whom were forced to close their doors,” the post said.
A new rule implemented in April 2023 by the California Public Utilities Commission (CPUC) substantially reduced the amount of money customers who installed solar energy can make by selling excess energy back to the grid.
“All over California we are seeing the grim reality of how the CPUC’s cuts to solar are taking livelihoods away from thousands of families,” Bernadette Del Chiaro, executive director of the California Solar and Storage Association, said in a statement in December 2023.