Back in the month of November 2016, when Tesla acquired SolarCity, Elon Musk dubbed this deal as the match that was made literally in heaven comprised of green energy. The perfect combination of a popular company dedicated to making electric cars when paired with the largest provider for rooftop solar panels in the nation in 2016 was all set to create the perfect place for customers to look for clean and green energy options.
However, something that Musk refrained from discussing was the fact that the company SolarCity at that time was suffering from a deep financial crisis. Just weeks post the merger, Ernst & Young; the SolarCity auditor concluded that the company didn’t have enough cash to adhere to its obligations when functioning as a single-handedly operating company, as stated in the court filings that were unsealed on Monday. These filings included the previously redacted materials.
In simple words, SolarCity could be dubbed almost bankrupt when the Tesla shareholders had voted to pay up as much as $2.6 Billion for the acquisition of this maker of solar panels. The company also promised that it would take away the debts owed by SolarCity and rescue it from complete bankruptcy.
These filings are a part of the long-running suit that was filed by Ellen Prasinos, the company shareholder, with all the Tesla shareholders backing it up. This suit was filed against Tesla’s Board of Directors along with Musk himself. It is alleged that together they overpaid and acquired SolarCity. They ignored their internal interest conflicts & failed from disclosing the troubling facts that were critical to rationalize the said deal between the companies.
Another allegation against SolarCity states that the company hid critical information from the auditor Ernst & Young with regards to two due payments with its lenders that could have been used for the determination of the financial condition of SolarCity. As of now, Tesla hasn’t filed any response in the court.
However, on Monday evening, Tesla issued its official statement to the popular magazine, The Times, stating that these allegations are entirely based upon the claims pitched by the plaintiff’s lawyers that are just looking for another payday. They are in no way the representatives of the shareholders who support the company’s mission & ultimately vote in favor of this acquisition. The company also stated that the accusations pitched in the brief by the Plaintiff are misleading and false.