Shareholders won't get an official voice in the bankruptcy of SunEdison Inc. because the company is "hopelessly insolvent," with debts outweighing assets by at least $1 billion, a bankruptcy judge has ruled.

The decision from Judge Stuart Bernstein followed a court fight aimed at proving the solar-power developer has enough value left to offer hope that shareholders would avoid a wipeout in bankruptcy.

Judge Bernstein, who has presided over SunEdison's chapter 11 case from its start in April, said it is "substantially unlikely" the company would be able to pay off its debts. Even working with book values on paper and estimates of what asset sales would bring, SunEdison would come up from $1 billion to $2.5 billion short of debts, the judge said.

The judge turned down a request for an official committee to represent shareholders in SunEdison's bankruptcy case, a bid that was driven in part by shock over the rapid decline in value in the company. Signed on Thursday, the ruling was filed Friday in the U.S. Bankruptcy Court for the Southern District of New York.

SunEdison's market capitalization plummeted in 2015 and 2016, as investors and business partners lost confidence amid mounting debt, incomplete deals and doubts about the company's finances.

Shareholders "have lost money on their investments, and hope that an official committee will capture value for them in the end. The appointment of an Equity Committee, however, will not create value where it does not exist," the judge said.

The dim outlook for SunEdison's bankruptcy isn't news to bond investors, who have been trading the company's debt for 6 cents on the dollar or less. That price reflects their conviction that SunEdison's bankruptcy won't produce enough value to pay them.

At a court hearing Thursday, SunEdison lawyers said the company is working on a business plan that could lead to a reorganization around assets that aren't sold in bankruptcy. Some of the solar power company's projects have been sold, others are going up for auction, and talks are under way about finding a buyer for SunEdison's control stakes in two separate public companies, TerraForm Power Inc. and TerraForm Global Inc.

Write to Peg Brickley at peg.brickley@wsj.com

(END) Dow Jones Newswires

August 12, 2016 08:35 ET (12:35 GMT)

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