Meltdown: What happened when a Las Vegas solar company fell apart

A Las Vegas homeowner is out more than $18,000. A company claims it is owed more than $700,000. A $20,644 lien is slapped on the home of an insurance agent. The list of claims stretches into the hundreds.

So goes the fallout in the saga of a Las Vegas-based solar company that declared bankruptcy recently after becoming the subject of the biggest investigatory case the Nevada State Contractors Board has handled.

Summerlin Energy Las Vegas LLC filed for bankruptcy last month after nearly quadrupling its revenue last year. It claimed about $680,000 in total property and more than $4 million in liabilities.

The small solar installation business, which went into 2015 looking to expand its operations, started 2016 facing a lawsuit from a supplier, complaints from customers anxious that they might have to pay twice for solar panels, and investigations from contractors boards in California and Nevada.

The issues came after Thanksgiving last year, when the company faced a tragedy with the fatal shooting of a company leader. Through February, Summerlin Energy was missing payments to its suppliers and at the end of the month, filed to liquidate through a Chapter 7 bankruptcy proceeding.

A company crumbles

In the weeks before the company filed for bankruptcy, the Nevada State Contractors Board, whose purpose is to license and discipline contractors, had received nearly 100 complaints from Summerlin Energy customers, including some who said they were charged twice for services or that they paid for work that was either abandoned or only partially performed. On Feb. 3, the board summarily suspended the company’s license to operate in Nevada. It is still investigating the consumer complaints before holding a hearing on the issue at the end of this month.

“This is the largest investigative case the board has handled in its history,” said Jennifer Lewis, a spokesperson for the board, which has been in existence since the 1940s.

The contractors board in California, one of the states where Summerlin Energy had operated, also has opened an investigation into the company. In addition, a similar agency in Arizona has reported at least one complaint against Summerlin Energy.

A lawyer for the company did not respond to multiple requests for comment, and it is unclear what led to the company’s bankruptcy.

But on Thanksgiving last year, a company leader who claimed to serve as the chief executive for Summerlin Energy, Henry Bankey, was fatally shot after a dispute with his ex-wife. From that time through February, Summerlin Energy missed several payments to at least two of its subcontractors, Clark County records show.

By the time the company filed for bankruptcy last month, it reported $678,596 in total property — $2,112 in checking accounts and $676,484 in accounts receivable — and owed $4,215,560 to creditors including customers, workers and vendors who sold solar panels and parts. Its parent company, Summerlin Energy, LLC, which also filed for bankruptcy, had about $100,000 in total property and more than $1 million in liabilities.

“I’m not sure there will be any assets for unsecured creditors in this case,” said Lenard E. Schwartzer, the court-appointed trustee.

Customers are charged twice

Caught in the middle were customers like Vadim Levitin, a retired medical doctor. He said he deposited about $18,000 with Summerlin Energy to install rooftop solar on his home. The company came to inspect his roof in November, he said, but that was the last contact he had.

“Something went wrong. Something bad happened,” he said. “I’m pessimistic about my ability to recover the money at the moment.”

Summerlin Energy, in its bankruptcy filing, lists about 300 customers among its creditors.

Other homeowners, like Troy Fletcher, were hit with liens, despite having already paid for their solar panels in full. Fletcher, an insurance broker, recalled having paid about $47,000 for his entire solar system. Summerlin Energy installed the system.

Then Summerlin Energy failed to pay a subcontractor for work on Fletcher’s home, and the subcontractor placed a $20,644 lien on his property. Fletcher does not recall being told the company worked with suppliers.

“It’s just mind-boggling,” he said. “What am I supposed to do, take out a loan to pay off something that I already paid for?”

That subcontractor was Sun Valley Electric Supply Co., which claims to have sold over $700,000 in solar panels and materials to Summerlin Energy. Taking a huge hit because of Summerlin Energy’s defaults, Sun Valley Electric began placing liens on customers' homes, a statutory right of subcontractors.

Simply put, the customer paid the contractor for the materials the subcontractor provided — solar panels. Despite receiving the funds from the customer, the contractor did not pay the subcontractor for the panels. To recoup its losses, the subcontractor was legally entitled to put liens on the customer’s property. This placed the customer in the position of potentially having to pay twice, once to the contractor for the panels and again to the subcontractor for the lien.

”Because of Summerlin Energy’s business decision, those companies have not been paid, which has had a trickle-down effect to homeowners who are getting liens on their houses,” Lewis said.

Clark County records show that Sun Valley Electric put about 100 liens on homes, ranging about $1,000 to over $20,000, because Summerlin Energy had missed payments for services. Soligent, another Summerlin Energy supplier based in California, has issued about 60 liens. Records show that some customers were assessed liens on their property from both Sun Valley Electric and Soligent. According to its bankruptcy filing, Summerlin Energy owes at least two other suppliers debts in excess of $300,000 each. It owes Soligent about $500,000, the filing says.

Sun Valley Electric, which claims it is owed $725,180, is suing Summerlin Energy in hopes of recovering some funds. Allegations in the suit include breach of contract and fraud.

“It’s a travesty for these homeowners,” said Donald Williams, Sun Valley Electric’s attorney. “It’s a travesty for my client.”

What's the recourse?

Sun Valley Electric, Williams said, hoped to alleviate the pressure on some of Summerlin Energy’s customers by recouping at least a portion of the losses through the actions in court.

“There are a lot of unanswered questions that I hope get answered through our litigation or the bankruptcy,” he said.

If Sun Valley Electric does not recover its losses in court, it will be protected through the liens. It is not unusual for a subcontractor to put a lien on a property. What is unusual, according to the State Contractors Board, is the scope of how many customers have been affected at once, a large group that is unlikely to recover money through the bankruptcy.

The board has a residential recovery fund for eligible customers, but it is capped at $400,000. It offers up to $35,000 per affected homeowner and the board is in the process of collecting all possible claims. Customers could also pursue litigation.

In the past, the board has encountered similar situations but never involving the levels of damages in the Summerlin Energy case. A yearlong probe in 2011, focusing on a pool contractor that had left work unfinished and failed to pay subcontractors, resulted in a combined $138,363 payment to 18 homeowners.

Pool contractors by law are not supposed to collect a down payment or deposit greater than $1,000 or 10 percent of the entire price.

There are no such rules for solar customers.

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