By Peg Brickley 

SunEdison Inc. has reached settlements with TerraForm Power Inc. and TerraForm Global Inc. that are worth $800 million in value to creditors waiting to be paid from its bankruptcy case.

The proposed pacts cut off disputes between SunEdison, a troubled solar power developer, and the TerraForm companies, former subsidiaries that are being sold to Canada's Brookfield Asset Management.

The settlements were outlined in filings Friday in the U.S. Bankruptcy Court for the Southern District of New York, where SunEdison is operating under chapter 11 bankruptcy protection.

Brookfield Asset Management has offered to $787 million in cash to buy TerraForm Global. It also proposes to become the sponsor for TerraForm Power with 51% ownership of the company.

The proposed agreements set out how much SunEdison will get from the Brookfield deal, a calculation that is affected by both ongoing and threatened litigation between SunEdison and the TerraForm companies.

The sale of the TerraForm companies is the major source of value for creditors owed billions of dollars by SunEdison, which filed for chapter 11 bankruptcy protection last year amid investigations into its accounting.

Settlement terms spelled out in bankruptcy court documents say SunEdison will get a share of the cash from the sale of TerraForm Global, but retain a portion of its equity in TerraForm Power.

Brookfield will be running TerraForm Power, which owns alternative power projects. SunEdison, under the settlement, stands to benefit from improved performance of the projects under Brookfield's sponsorship.

The official committee of SunEdison's unsecured creditors has been clamoring to pursue lawsuits against the TerraForm companies. The TerraForm companies, for their part, have said they have $3 billion worth of damage and other claims against their former parent.

The creditors committee hasn't signed on to the settlements, which would trade off the clashing claims and set the stage for SunEdison to exit bankruptcy.

SunEdison proposes to allot some of the value from the settlements to unsecured creditors. Court papers say the company's lawyers will be talking to creditors in the coming days, with a view toward reaching a deal on how to divide the proceeds of the settlement between senior and junior creditors.

The company has said it would file a chapter 11 exit plan by the end of March.

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

(END) Dow Jones Newswires

March 13, 2017 07:34 ET (11:34 GMT)

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