NRG NRG Energy Inc

Renewable energy giant SunEdison Inc. has placed its Canadian arm into bankruptcy while the parent company seeks more time under court protection in the U.S. to sell off assets and work out a strategy for repaying billions of dollars in debt.

The company's Canadian division, which also designs and develops renewable energy projects, says it can no longer fund its operations. It sought protection Thursday from both creditors and lawsuits under Canada's Companies' Creditors Arrangement Act, or CCAA, the equivalent of chapter 11 in the U.S.

The Canadian operation, which is concentrated in Ontario, says its financial woes are largely tied to liquidity issues stemming from the bankruptcy of its parent company in the U.S. The Canadian unit's businesses listed about $80 million in total assets and about $30 million in liabilities, in addition to about $90 million in other potential liabilities that are the subject of pending litigation.

In court papers filed Thursday in New York, SunEdison said it is at a "critical juncture" in its own chapter 11 case and asked Bankruptcy Judge Stuart Bernstein to give it until at least Feb. 15 to formulate a plan that maximizes the value of its assets.

A hearing on SunEdison's request to extend the U.S. proceeding is scheduled for Nov. 17. A so-called exclusivity extension, common in chapter 11 cases, would keep SunEdison in the driver's seat and bar creditors from proposing their own plans for the company's future. Allowing exclusivity to expire would jeopardize the work the company has already put into the bankruptcy, lawyers for SunEdison said in court papers.

The bill for lawyers and other professionals working on the case already exceeds $60 million, court papers show.

SunEdison has been selling off bits and pieces of the business it built up in a debt-fueled expansion that abruptly collapsed earlier this year. Since then, the company says it has completed sales of 19 assets, bringing in proceeds of about $609 million.

The sales, which the company plans to continue, include a collection of its North American solar- and wind-power projects that it won court approval last month to hand off to an affiliate of NRG Energy Inc. for $144 million.

SunEdison says it also needs more time to determine the right path forward for handling its complex ties to TerraForm Global, Inc. and Terraform Power Inc., the so-called yieldco companies that are separate publicly traded companies and were part of the financial engineering that helped fuel SunEdison's boom. The two yieldcos have not sought bankruptcy protection.

SunEdison says it is exploring a number of options, including a sale of its controlling stakes in the yieldcos, but hasn't yet named lead bidders.

Lawyers for SunEdison must also work out claims by TerraForm Global and Terraform Power that SunEdison's troubles have done more than $3 billion of damage in the aggregate to their businesses. SunEdison says it disagrees with many of the claims but is in settlement talks with the yieldcos, another reason why it has asked the judge to give it more time.

SunEdison filed for chapter 11 while under investigation by the Securities and Exchange Commission and Justice Department concerning its cash levels and dealings with TerraForm Global, among other things.

Judge Bernstein has already said SunEdison is "hopelessly insolvent" and likely to leave behind more than $1 billion in unpaid debts.

Peg Brickley and Jacqueline Palank contributed to this article.

Write to Tom Corrigan at tom.corrigan@wsj.com

(END) Dow Jones Newswires

October 28, 2016 16:25 ET (20:25 GMT)

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