When a Solar Company Closes and Reopens Under a New Name

Three Different Things Get Called "Starting Over"

Solar installers change names for ordinary reasons, including mergers, new owners and rebrands. When a company has gone through bankruptcy, a restart is sometimes called a phoenix company, a term for a business that closes and returns in a new form. The label does not tell you whether anything improper happened, and it does not tell you who owes your warranty. The legal structure does. There are three common structures:

• A rename. The same legal entity changes its trade name. Its obligations generally stay with it, because nothing was sold.
• An asset sale. One company buys some or all of another's assets, often in bankruptcy, and may or may not agree to honor customer warranties. The buyer is a different legal entity from the seller.
• A new company with no connection. A new business is formed, possibly by former employees, and takes on none of the old company's contracts. As a general rule it does not owe the old company's obligations unless it agrees to, subject to the exceptions described below.

Three Documented Examples, Described as the Sources Describe Them

These are the cases our research turned up where the public record is clear. Court-approved sales like these are lawful and common, and none of these companies is accused of wrongdoing. Each is a court-approved or reported asset sale followed by a name change or a name revival, and each is described below only as far as the cited reporting goes.

The pattern across the three is an asset sale, a new owner, and a brand that either continues, changes or returns. For a homeowner the question is the same each time: which company, if any, took on the promise I was given? The Sungevity case is the clearest illustration. After the sale, the successor offered former customers a warranty to buy. Any other sale turns on its own paperwork and on state law.

Does the New Company Owe Your Old Guarantee?

This section is general information. A lawyer who knows your state's law is the right person to apply it to your contract.

The General Starting Point

Courts in many states start from the same rule: a company that buys another company's assets does not take on the seller's debts and obligations unless an exception applies. The California Supreme Court listed the usual four, and then added a narrower product-line rule for injuries from defective products. The buyer does not assume the seller's liabilities unless "there is an express or implied agreement of assumption," "the transaction amounts to a consolidation or merger of the two corporations," "the purchasing corporation is a mere continuation of the seller," or "the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller's debts" (Ray v. Alad Corp., 19 Cal. 3d 22, 28 (1977)).

Massachusetts recognizes the same four exceptions (Guzman v. MRM/Elgin, 409 Mass. 563 (1991), and Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547 (2008)). A federal appeals court applied them in DeJesus v. Park Corp., No. 12-2014 (1st Cir. Aug. 1, 2013), an unpublished opinion. That was a product-injury case. The buyer there kept some of the old company's staff and answered its phones "Thank you for calling Bertsch," the old company's name, and the court still held it was not liable as a successor. Each state applies these exceptions in its own way, and courts weigh the facts case by case.

What Bankruptcy Adds

When the seller is in bankruptcy, federal law allows a sale of property "free and clear" of certain interests in listed circumstances, such as when the interest holder consents or when the sale price is greater than the total of all liens on the property (11 U.S.C. § 363(f)). How that applies to a customer's warranty claim is a legal question. You can check the paperwork yourself. The asset purchase agreement filed on the court docket may list which contracts and liabilities the buyer assumed and which it did not.

What to Do With That

1. Find the bankruptcy case. The claims agent's website or the court docket (PACER, at pacer.gov) is searchable by the old company's name.
2. Look for the asset purchase agreement and any schedule of assumed contracts or liabilities. Customer warranties may or may not appear.
3. Ask the new company, in writing, whether it assumed your contract and warranty and what service it will provide. Keep the reply.
4. The new company's answer does not settle the question by itself. If it did not assume them, the old promises generally remain with the old company unless one of the exceptions above applies. See our guide to what to do when an installer goes out of business.
5. If the answer is unclear or you think the structure was used to avoid obligations, consult a lawyer. Most state bar associations run a lawyer referral service that can connect you with one who handles consumer or business matters. Your state attorney general's consumer protection office can also take complaints. We summarize several state statutes in our California and Massachusetts guides.

How to Check a Solar Company's History Before You Sign

Many installers are stable local businesses, and a name change on its own is not a warning sign. A short check takes about half an hour and tells you which kind of company you are dealing with.

• State business registry. Search your state's Secretary of State business database for the company. Look at the formation date, the registered name, any prior names or trade names, and whether the entity is in good standing. A company that has been on roofs for 15 years but was formed last spring is worth a question.
• Contractor license lookup. Many states license solar contractors, and the lookup shows license status, bond information and sometimes complaint history. California's is the Contractors State License Board lookup. Other states run their own licensing boards.
• Court records. Search PACER for bankruptcy filings under the company name and any prior names, and search your state courts for consumer lawsuits.
• Attorney general and consumer complaints. Your state attorney general's office may publish or release complaint information.
• Warranty backing. Ask who stands behind the workmanship warranty if the company closes. Is it backed by an insurance policy or a third-party warranty provider, and can you see the certificate? Is any deposit held in escrow? A warranty backed only by the company may be worth little if the company closes. See our guide to performance guarantee insurance.

Questions to Ask the Installer

1. How long has this legal entity existed, and has the business operated under any other names?
2. Has the company or any of its principals been through a bankruptcy, and was any part of the business sold?
3. Who exactly is the party making each promise in the contract, and what is its legal name?
4. If the company closes, who services my system and who honors the workmanship warranty? Is that in writing?
5. Is the production guarantee backed by insurance, or only by the company's own balance sheet?
6. Will I be registered as the owner of the monitoring account from day one, so I can see my own data?
7. Can I assign the warranty to a buyer if I sell the house?

Why Your Own Production Record Matters in Every Version of This

If a company changes hands, the first thing that gets lost is the history: who monitored the system, what it produced, and what was promised. A record kept by you survives every change of name. Make sure the Enphase or SolarEdge monitoring account is yours (our guides cover Enphase and SolarEdge), export your history on a schedule, and compare it with a weather-adjusted expected number (how that works). If a successor company does honor your guarantee, that record is how a shortfall is shown. If it does not, the same record can support a claim against the old company. The shortfall claim guide walks through it.