Honolulu-based renewable energy firm Hoku Corp. and two of its affiliates filed for Chapter 7 bankruptcy Tuesday, ending a long downward spiral that began with the company’s ill-fated attempt to develop a polysilicon plant in Idaho.
Hoku Materials, the subsidiary building the plant in Pocatello, listed assets of $7.4 million and liabilities of $780 million in documents filed in U.S. Bankruptcy Court in Idaho. Under a Chapter 7 filing a company’s assets are liquidated, and the proceeds are use to pay debts.
Hoku stopped construction on the $700 million facility in May 2012 and laid off 100 workers.
Hoku Solar, the company’s second subsidiary, which sells and installs PV systems, listed no liabilities.
Founded in 2001 and once heralded as one of Hawaii’s most promising technology startups, Hoku Corp.’s troubles began in 2009 with a decline in prices for polysilicon, the raw material used to make solar panels. Hoku had used advance deposits from polysilicon customers to fund construction of the plant. However, customers began canceling their contracts as prices fell and asked for their deposits to be refunded.
Running short of cash, Hoku executives turned to Chinese investors, who took control of the company in 2009. The investors, led by Tianwei New Energy Holdings Co., were unable to complete construction of the polysilicon plant despite pouring more than $300 million into the project, most of which was borrowed from Chinese banks.
Tianwei listed $458 million in secured debt in the bankruptcy filing, making it the largest creditor by far.
Tianwei reorganized the company in 2011, and chief executive officer Scott Paul resigned the following year. At the time, the company said it was considering spinning off the profitable Hoku Solar as a stand-alone company, but that never happened. Paul remained on the company’s board of directors until the bankruptcy filing.
Hoku Materials’ secured creditors included a mix of Chinese companies and U.S. vendors that supplied materials and services for the construction of the Idaho plant. The single largest creditor after Tianwei was Hanwha SolarOne, a Shanghai-based company that is owed $49 million for construction and professional services.
Hoku received authorization from the state Legislature in 2005 to raise $10 million through the sale special-purpose revenue bonds, but the company opted not to go through with the bond issuance.
Hoku ended up getting a bank loan, which it used to build a facility in Kapolei to develop fuel cells.
The initial startup was successful, and the company branched out to solar energy production, then selling solar panels.
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Correction: Hoku Corp. chief executive officer Scott Paul resigned in 2012 but remained on the company’s board of directors until the bankruptcy filing. An earlier version of this story incorrectly reported that the company removed him as CEO. Also, Hoku never raised money through a sale of state-authorized special-purpose revenue bonds. The earlier version reported that the company raised $10 million in a bond sale.
