ADDITIONAL CASES In re: Sunedison, Inc., et al., Reorganized Debtors; 16-10992 MEMORANDUM DECISION GRANTING MOTION TO DISMISS THE AMENDED COMPLAINT The SunEdison Litigation Trust (“Plaintiff”) sued Seller Note, LLC (“Seller Note”) and the other Defendants1 seeking to avoid and recover, as constructively fraudulent, the transfer by SunEdison Holdings Corporation (“SunEdison Holdings”) of certain securities to Seller Note. Seller Note pledged the securities to Wilmington Trust, N.A. (“Wilmington Trust”) to hold for the benefit of the Defendants as collateral for certain exchangeable notes issued by Seller Note. The Defendants have moved to dismiss the Complaint.2 (Defendants’ Memorandum of Law in Support of Their Motion to Dismiss the Amended Complaint, dated Sept. 13, 2019 (the “Motion”) (ECF Doc. # 20).) They contend, inter alia, that the safe harbor under 11 U.S.C. §546(e) shields them from the Plaintiff’s claims. I agree, and accordingly, the Motion is granted. BACKGROUND A. The YieldCos and TERP SunEdison Holdings was a wholly-owned subsidiary of SunEdison, Inc. (“SUNE”), a renewable-energy development company, and owned renewable energy systems such as solar arrays and wind farms (“Projects”). ( 7.)3 SUNE either operated or sold the Projects to “YieldCos”4 or other third-party purchasers. ( 17.) In March 2014, SUNE created a YieldCo subsidiary, TerraForm Power, LLC (“Terraform”). (Id.) On July 22, 2014, SUNE contributed Terraform to Terraform Power, Inc. (“TERP”) concurrently with the IPO of TERP. (Id.) Following the IPO, SUNE, through SunEdison Holdings, maintained a majority stake in both Terraform and TERP. ( 18.) TERP is publicly traded on the NASDAQ under the ticker symbol “TERP” and has two classes of common stock: Class A, which is publicly held, and Class B, which was privately held by SunEdison Holdings. ( 19.) As of November 2014, SunEdison Holdings owned shares of Class B common stock (the “Class B Stock”) in TERP and Class B units (the “Class B Units”) in TerraForm Power Operating LLC, one of TERP’s operating subsidiaries. ( 20.) B. The Purchase and Sale Agreement On November 17, 2014, SUNE and TerraForm Power, LLC (“Buyers”), with TERP as guarantor, entered into a Purchase and Sale Agreement (the “2014 PSA”)5 with D. E. Shaw Composite Holdings, L.L.C. and certain of its affiliates, Madison Dearborn Capital Partners IV, L.P. and others to acquire their equity interests in a renewable-energy company called First Wind Holdings, LLC and certain of its subsidiaries (collectively, “First Wind”). ( 21; 2014 PSA §2.01(a).) SunEdison Holdings was not a party to the 2014 PSA. ( 22.) The Buyers agreed in the 2014 PSA to acquire different First Wind assets. ( 23.) SUNE would purchase equity interests representing First Wind’s development platform, pipeline and projects in various stages of development (the “SUNE First Wind Assets”). (Id.) Terraform agreed to purchase equity interests representing First Wind’s operating portfolio, which included wind and solar power generation assets (the “TERP First Wind Assets”). (Id.) SUNE’s portion of the purchase price was to be funded, in part, by exchangeable notes to be issued by a special purpose vehicle with a maximum aggregate principal amount of $350,000,000. ( 24; 2014 PSA §2.01(c).) Alternatively, SUNE could pay the entire closing consideration in cash (i) upon ten business days’ notice prior to closing, and (ii) upon acceptance in writing of the cash alternative by certain Defendants. (2014 PSA §2.01(d).) As conditions to closing, (1) the relevant parties had to execute an Indenture and a Pledge Agreement, (see id. §8.01(h)(i)); (2) a special purpose entity (i.e., Seller Note6) had to be formed, (see id. §8.01(h)(ii) (describing formation of “SPV Issuer”); id. at p. 24 (defining “SPV Issuer” as “the special purpose entity…to be formed in connection with the issuance of the Exchangeable Notes”)); (3) SunEdison Holdings had to contribute the aforementioned Class B Stock and Class B Units (collectively, the “Class B Securities”) to Seller Note, (see id. §8.01(h)(iv)); and (4) Seller Note had to pledge the Class B Securities to Wilmington Trust as “Collateral Agent.” (See id. §8.01(h)(v) (describing pledge to “Collateral Agent”); id. at p. 9 (defining “Collateral Agent” as Wilmington Trust).) C. The January 2015 Transfer Seller Note was formed as the special purpose vehicle on January 16, 2015. ( 26; see 2014 PSA §8.01(h)(ii).) Thirteen days later, all of the transactions contemplated by the 2014 PSA took place: (i) Seller Note issued 3.75 percent Guaranteed Exchangeable Senior Secured Notes due in 2020 in the amount of $336,470,000 (the “Exchangeable Notes”) pursuant to an Indenture, dated Jan. 29, 2015 (the “Indenture”),7 by and among Seller Note (as issuer), SUNE (as guarantor), and Wilmington Trust (as exchange agent, registrar, paying agent, and collateral agent). ( 27.a; 2014 PSA §§2.01(c), 8.01(h)(i); Indenture §2.01, Preamble.) (ii) SunEdison Holdings transferred 12,161,844 shares of Class B Stock and 12,161,844 shares of Class B Units (i.e., the Class B Securities) to Seller Note to facilitate the First Wind acquisition under the 2014 PSA (the “Step One Transfer”). ( 27.b.) (iii) Pursuant to a Pledge Agreement, dated Jan. 29, 2015,8 between Seller Note and Wilmington Trust, Seller Note pledged its interests in the Class B Securities (the “Pledged Collateral”) to Wilmington Trust to hold for the benefit of the Defendants (the “Step Two Transfer,” and collectively with the Step One Transfer, the “January 2015 Transfer”).9 ( 27.b; Pledge Agreement §2.01.) As “Collateral Agent,” Wilmington Trust held a first lien in the Class B Securities for the benefit of the Defendants. (See Indenture §14.01; Pledge Agreement §2.01.) In the event of a default, Wilmington Trust could sell the Class B Securities or otherwise enforce the lien to pay the Defendants. (See Indenture §14.03(b)(i); Pledge Agreement §3.01.) Upon satisfaction of the Exchangeable Notes, the liens on the Class B Securities would be released, and Wilmington Trust would reconvey the released collateral to Seller Note. (Indenture §14.04.) The First Wind transaction closed the same day, on January 29, 2015. ( 27.) The SUNE First Wind Assets were allocated to SunEdison Wind Holdings, Inc., a direct, wholly-owned subsidiary of SUNE. ( 29.) On February 19, 2015, SunEdison Wind Holdings, Inc. was renamed SunEdison Utility Holdings, Inc. (Id.) The TERP First Wind Assets were folded into TERP and its corporate structure. ( 30.) D. The January 2016 Transfer During 2015, the financial condition of SUNE and its affiliates deteriorated. (See
34-40.) By December 2015, the Defendants claimed that SUNE and Seller Note were in default of certain obligations under the 2014 PSA and the Indenture. ( 48.) To address their alleged defaults, on December 29, 2015, SUNE, certain of its affiliates, and Seller Note entered into a purchase and sale agreement (the “December 2015 PSA”)10 with the Defendants. (Id.) Pursuant to the December 2015 PSA, the Defendants released their interests in the Class B Securities to Seller Note in contemplation of receiving 12,161,844 shares of Class A common stock in TERP. ( 49.) On January 22, 2016, at the instruction of the Defendants, Wilmington Trust delivered the Pledged Collateral to a transfer agent, which issued 12,161,844 shares of Class A common stock in TERP to the Defendants (the “January 2016 Transfer”). (Id.; December 2015 PSA §2.01(b).) On the same day, Defendants delivered Exchangeable Notes in the aggregate principal amount of $121,470,000 to Wilmington Trust for cancellation.11 (December 2015 PSA §§2.01(b), (c).) E. The Chapter 11 Bankruptcy and Creation of the Litigation Trust Beginning on April 21, 2016 (the “Petition Date”), SUNE, SunEdison Holdings, and various other affiliates (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Court”). ( 6.) Seller Note was not a debtor. ( 13.) On July 28, 2017, the Court entered an order (the “Confirmation Order”)12 confirming the Debtor’s Second Amended Plan of Reorganization (the “Plan”).13 ( 9.) On December 29, 2017, the Plan became effective (the “Effective Date”).14 ( 10.) Pursuant to the Plan, on the Effective Date, all of the Debtors’ rights, title and interests in the GUC/Litigation Trust Causes of Action (as defined in the Plan) were transferred to Plaintiff. ( 11.) Plaintiff was authorized, as the representative of the Debtors’ estates, to pursue the GUC/Litigation Trust Causes of Action, including the causes of action asserted in the Complaint, and pursue claims under sections 502(d), 547, 548 and 550 of the Bankruptcy Code. ( 12.) F. The Adversary Proceeding and Motion to Dismiss Plaintiff commenced this adversary proceeding on April 20, 2018. The Complaint seeks to avoid the Step One Transfer (SunEdison Holdings’ delivery of the Class B Securities to Seller Note) as a constructive fraudulent transfer and recover its value from the Defendants pursuant to 11 U.S.C. §§548(a)(1)(B) and 550 (Count I) and 11 U.S.C. §§544, 550 and N.Y. Debt. & Cred. Law §§272-275, 278 and/or 279 (Count II) on the alternative theories that the Step One Transfer was made for the Defendants’ benefit, (
