Solar Mosaic: existing lender to assume loan servicing

Solar Mosaic: existing lender to assume loan servicing

Solar Mosaic, a leading fintech platform for U.S. residential solar and energy-efficient home improvements, has received court approval for its Chapter 11 Plan of Reorganization. The approval allows Solar Mosaic to recapitalize its loan servicing operation, with Solar Servicing LLC, a subsidiary of Forbright Bank, assuming the loan servicing role [1].

The United States Bankruptcy Court for the Southern District of Texas approved the reorganization plan, which will see Solar Servicing LLC, a wholly owned subsidiary of Forbright Bank, take over the loan servicing operations. This transition is expected to close in the coming weeks, subject to customary closing conditions. Forbright Bank, an FDIC-insured commercial lender, will continue to provide seamless and innovative personal banking services to depositors and creative financing solutions to middle market businesses and investors [1].

The reorganization plan ensures that Mosaic's loan servicing business will continue to operate as normal, with no changes to payment terms or schedules for borrowers. Don Cole, Chief Executive Officer at Forbright Bank, expressed his enthusiasm for the opportunity to grow the business and deliver exceptional solutions to customers nationwide [1].

As Mosaic works to complete the Reorganization Transaction, it continues to maintain its loan servicing operations, ensuring that borrowers can continue to pay their loans as planned and that collections are remitted to loan owners. Additionally, Mosaic is working through next steps on its open installer pipeline processing [1].

The recent reorganization comes amidst broader challenges facing the residential solar industry. High interest rates and state policy headwinds have destabilized major rooftop solar firms, with two prominent firms, Sunnova and Solar Mosaic, filing for Chapter 11 bankruptcy protection in recent days [2]. The proposed GOP tax credit cuts could exacerbate these challenges, potentially leading to a 40% decrease in solar installations over the next five years [2].

The industry's struggles are not merely due to challenging business conditions but also to strategic and tactical mistakes made in response to the sector's ongoing woes. Both Sunnova and Mosaic faced liquidity crunches due to their inability to sell solar-backed assets and raise cash to meet debt payments as market conditions soured [2].

While the future of the residential solar industry remains uncertain, Mosaic's reorganization plan offers a glimmer of hope. The transition to Solar Servicing LLC ensures that Mosaic's loan servicing operations will continue uninterrupted, providing stability to borrowers and investors alike.

References:
[1] https://www.streetinsider.com/Business+Wire/Mosaic+Receives+Court+Approval+of+Plan+of+Reorganization/25301403.html
[2] https://www.canarymedia.com/articles/solar/sunnova-mosaic-bankruptcies-industry-challenges