Customers of Sun Badger Solar, a now-defunct Waukesha solar company, hoping to get a refund for unfinished work through receivership proceedings will not get a penny in the immediate future.
A Waukesha County Circuit Court judge last month approved a final order discharging the receiver tasked with overseeing Sun Badger’s assets. The order allows the receiver to pay the Wisconsin Department of Workforce Development more than $120,000, which will go toward unpaid wages for the defunct company’s employees.
The case could be reopened if a former Sun Badger employee is criminally convicted for alleged embezzlement and forced to pay restitution, according to the order. The restitution would go to the Waukesha County court for proceedings to determine where those funds should go.
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Receivership is a court-supervised alternative to bankruptcy where a neutral third party takes control of a business’ assets. It can be used to help creditors recover funds when a company cannot pay its debts.
Sun Badger did business in Wisconsin, Minnesota and Illinois. Its customers were left scrambling last year when the company stopped solar installations.
An affidavit filed in federal court last December says the company was in financial turmoil in fall 2022 but continued booking projects. The filing said Sun Badger terminated its LLC license in March 2023 while dozens of clients were waiting on projects to be completed.
The affidavit was part of an application for a search warrant filed by the FBI to obtain internal digital communications as part of its investigation into the company. A spokesperson for the FBI’s Milwaukee field office said via email Monday “it remains an ongoing matter.”
The Wisconsin Department of Justice did not immediately respond to a request for comment regarding possible state level investigations. And a spokesperson for the state Department of Agriculture, Trade and Consumer Protection said the agency does not have any additional information to provide on the case.
124 creditors submitted proof of claim, arguing they were owed more than $12.2M
In June 2023, Waukesha County Circuit Court appointed attorney John Wirth to serve as a receiver over Sun Bader’s assets, according to the receiver’s final report filed in circuit court last month.
When Wirth became the receiver, the company only had about $30,000 of cash on hand. Wirth oversaw the auction of Sun Badger’s physical assets in Waukesha, which brought in roughly $226,786, court documents said.
Beyond the auction, Wirth made other attempts to recover additional funds. He sought assets from business locations, but found those sites had been “abandoned long before” the receivership began.
“I was appointed receiver months after the company was closed, and at that point there were fewer assets,” Wirth told WPR. “Creditors had grabbed them. Assets may have been dissipated.”
The receiver’s final report estimates that roughly $130,000 of the Sun Badger assets, either cash on hand or money raised through the auction, had been spent through receivership proceedings.
According to circuit court documents, Deloitte Risk & Financial Advisory conducted a “forensic review” of Sun Badger’s records, which identified that a former employee embezzled more than $500,000 from the company.
The embezzlement was reported to law enforcement in Illinois, who opened an investigation, court documents said.
Wirth said the employee operated out of the company’s Illinois office, had a high-ranking finance role and was not a Sun Badger owner.
“She was hired to take care of the books,” he said. “I’m relying on the Deloitte report. I don’t have any other information to add to it. She hid a lot of theft, including paying for a lot of her own personal expenses through company money.”
No criminal charges had been brought when the receiver’s final report was filed last month, and court documents said criminal proceedings could take more than a year. Wirth said keeping receivership proceedings open while waiting on a potential prosecution and conviction “doesn’t make good business sense” for taxpayers or Sun Badger’s unpaid employees.
“I have no idea what she ultimately did with the money, but the majority of restitution claims are never repaid,” Wirth said.
According to court documents, a total of 124 creditors submitted a proof of claim, arguing they were owed more than $12.2 million.
Under state law, Wirth said a bank with a secured lien on a business needs to get paid first and then wages for unpaid employees become the second priority, which is why DWD is the only entity receiving funds.
A DWD spokesperson said via email the department expects to receive roughly $126,000, which will go to unpaid Sun Badger employees.
“When businesses close unexpectedly, DWD’s Equal Rights Division works to ensure that the unpaid wages that employees have earned are recovered first,” the spokesperson said.
As of last June, a DWD investigation found Sun Badger owed roughly three-dozen employees $430,363 in unpaid wages.
Wirth said he empathizes with the creditors who paid for unfinished solar projects. He says customers who were wronged may be able to bring legal action against Sun Badger owners individually.
“It might not be cost effective,” Wirth said. “But if people think that (receivership) is a vehicle to right all wrongs, that’s not what the law provides.”
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