Appeals court upholds SolarWorld’s $800 million debt to Hemlock

The solar trade war that has raged over the last five years between the United States and China has had a number of consequences. While duties imposed in 2012 and 2014 on imports from China and later Taiwan did not lead to a resurgence in U.S. solar cell and module manufacturing, they did lead to retaliatory tariffs against U.S. polysilicon.

This in turn closed off the world’s largest polysilicon market to U.S. producers, with devastating consequences. And one of the few options left for U.S. polysilicon makers, other than attempting to compete in the much smaller semiconductor market, was to strictly enforce contracts which were signed at a time when polysilicon prices were much higher.

This has been the position taken by Hemlock Semiconductor, once a polysilicon giant and now a pale shadow of its former self. And perhaps no one was more on the hook than SolarWorld, one of its biggest customers.

Yesterday, an appeals court judge upheld a lower court ruling which requires that a German SolarWorld subsidiary pay Hemlock nearly $800 million for breaking a long-term contract for polysilicon. Hemlock had initially sued for damages in 2013, after SolarWorld Industries Sachsen GmbH refused to return to an original price after a temporary discount.

The news comes as CEO Frank Asbeck has restarted production at the German facilities of SolarWorld AG under a new company, SolarWorld Industries GmbH. This follows the approval of creditors and anti-trust authorities.

And despite the humming of SolarWorld factories, it may be hard for Hemlock to collect. Last Friday a district court in Bonn excluded Hemlock from the creditor’s meeting, and despite the approval of American courts, German authorities will make a decision in November as to whether Hemlock’s claim is legitimate or not. A spokesperson for the insolvency administrator has told pv magazine that he will examine the ruling.

It may be that Hemlock can get back a small amount from the insolvent estate of SolarWorld; or that the company receives nothing.