PGR Lessee I - Chapter 11 Case Summary
PGR Lessee I has filed for Chapter 11 bankruptcy following an August 2026 New York court order requiring it and affiliated indemnitors to post approximately $30.2 million of collateral under a surety indemnity agreement the Debtors contend the former managing member of their parent joint venture entered into without authority, alongside persistent cash flow deficits against roughly $129.3 million of project-level secured debt on the Debtors' seventeen solar facilities. The Debtors are pursuing a strategic restructuring that may include a court-supervised sale of substantially all assets, supported by proposed consensual use of cash collateral and anticipated debtor-in-possession financing under discussion with parent Back Bay Capital.
Business Description
PGR Lessee I, LLC and its affiliated debtors (collectively, the "Debtors") own and operate seventeen utility-scale solar power facilities (the "Solar Projects") in North Carolina, South Carolina and Rhode Island, representing approximately 262 megawatts (MWdc) of aggregate generating capacity. The Debtors comprise seventeen project-level entities, each owning and operating one facility, together with two direct or indirect parent companies of certain of those project-level entities.
The Debtors have no employees. Their businesses, finances and operations are handled entirely through SunStrong Management LLC ("SunStrong Management"), a Houston-based asset manager. Sixty-eight other non-Debtor entities owning or operating solar power facilities are subsidiaries of the Debtors' joint venture parent, Back Bay Capital Holdings, LLC ("Back Bay Capital").
Corporate History
The Debtors are indirectly owned by a joint venture formerly known as PGR Signature Fund 1, LLC ("Signature Fund 1") and now renamed Back Bay Capital. The venture was originally owned by Back Bay Solar, LLC ("BBS") and Pine Gate Renewables, LLC ("PGR"), the latter acting through its wholly owned subsidiary PGR Signature Fund 1 Manager, LLC ("PGR Manager"), which served as managing member. Between 2018 and 2022, PGR contributed eighty-five solar projects to the joint venture, having contributed eighty-seven in total before re-acquiring two.
Separation from Pine Gate Renewables
In November 2025, PGR and certain affiliates, including PGR Manager, filed for Chapter 11 in the Southern District of Texas to pursue a going-concern sale of all of their businesses and assets followed by an orderly wind-down. Neither Signature Fund 1 nor any of its subsidiaries, including the Debtors, were debtors in that case. During the PGR bankruptcy, BBS negotiated a separation of Signature Fund 1 from PGR to stabilize the joint venture and its solar projects, and in December 2025 the court presiding over the PGR case approved a settlement between PGR and BBS providing for PGR Manager's exit from the joint venture. SunStrong Management took over at that point as interim asset manager for Signature Fund 1 and its subsidiaries.
The exit transaction closed in May 2026, with GoodFinch Back Bay Manager, LLC ("GoodFinch Manager") replacing PGR Manager as managing member and Class A member. SunStrong Management, an affiliate of GoodFinch Manager, became permanent asset manager for the renamed Back Bay Capital and its direct and indirect subsidiaries. The corporate structure of the joint venture's subsidiaries, including the Debtors, largely remained the same.
Equity and Governance
Non-Debtor Back Bay Capital is the Debtors' common parent above the inverted lease structure, and has two investor members:
- BBS, as Class B member — interests that function in a manner similar to preferred equity, with a predetermined priority distribution from any excess cash generated by the Solar Projects.
- GoodFinch Manager, as Class A member — interests more akin to common equity. GoodFinch Manager is also the managing member of Back Bay Capital, subject to BBS's consent rights over certain "Joint Decisions" under the governance documents.
On September 4, 2026, GoodFinch Manager, with BBS's consent, appointed Craig R. Jalbert as independent Special Manager for the Debtors to consider strategic and restructuring alternatives, including the possible commencement of insolvency proceedings.
Operations Overview
Day-to-day management of the Solar Projects and of each Debtor is carried out by SunStrong Management under an asset management and administrative services agreement (the "AMA"), which covers treasury, accounting, financial, tax, legal and other general management services. The Debtors outsource all operations and maintenance needs to third-party vendors, including ACT Power Services, LLC, Borrego Solar System, Inc. and Cypress Creek O&M, LLC (collectively, the "O&M Vendors"). The Debtors' business operations depend on the services provided by SunStrong Management and the O&M Vendors.
Since the separation from PGR, the Debtors have worked with SunStrong Management to improve the Solar Projects' operational efficiency and earning potential.
Prepetition Obligations
As of the Petition Date, total project capital stood at approximately $133.9 million, consisting of approximately $129.3 million of permanent debt and $4.6 million of tax equity.
| Facility | Amount Outstanding / Invested | Interest Rate | Maturity |
|---|---|---|---|
| Tax Equity | $4,559,399 | N/A | N/A |
| Permanent Debt | $129,318,846 | Various | Various |
| Total Project Capital | $133,878,245 |
Prepetition Secured Debt
Every Debtor that owns a Solar Project carries permanent debt (the "Prepetition Secured Debt") secured by all-asset liens in favor of its respective secured lenders, including Live Oak Bank Company, Pathward, N.A., First-Citizens Bank, Zions Bancorporation and Landesbank Hessen-Thüringen Girozentrale (collectively, the "Prepetition Secured Lenders"). Each Solar Project has a separate, independent loan facility, and the debt associated with each is not cross-collateralized across the other Solar Projects. Principal and interest are due quarterly on all Prepetition Secured Debt. Approximately $129 million was outstanding as of the Petition Date.
Tax Equity and the Inverted Lease Structure
Tax equity financing involves investors providing capital to a solar project in exchange for the right to be allocated clean energy tax credits associated with the project. Centerfield Cooper, LLC is the only Debtor entity that currently has a tax equity investor; tax equity investors in all other Debtors have been bought out. PGR and Signature Fund 1 used an inverted lease structure, under which the project is leased to an entity owned in part by a tax investor and the tax credits pass through to the lessee under applicable federal tax rules (the "Inverted Lease Structure"). All of the Debtors continue to maintain that structure within their associated fund, including those without a tax equity investor. PGR Lessee I, LLC and PGR Lessor I, LLC are the lessee and lessor entities for Fund I.
Events Leading to Bankruptcy
The General Indemnity Agreement
The Declaration states that at or about the time PGR filed for bankruptcy relief, BBS discovered that PGR, acting through then-CFO Ray Shem and then-CEO Ben Catt, had caused certain of the Debtors (the "Purported Debtor Indemnitors") to purportedly enter into a General Indemnity Agreement dated June 12, 2019, with addendums dated September 13, 2019, March 23, 2020, May 7, 2020 and July 1, 2020 (collectively, the "GIA"), for the benefit of Atlantic Specialty Insurance Company (the "Surety"). The GIA provided credit support to solar projects that were not owned or controlled, directly or indirectly, by the Debtors or Signature Fund 1. The Purported Debtor Indemnitors are PGR Lessee I, LLC, Alpha Value Solar, LLC, Cubera Solar, LLC, ESA Four Oaks 2 NC, LLC, ESA Hamlet NC, LLC, Rankin Solar Center, LLC, Spring Hope Solar 3, LLC, Centerfield Cooper Solar, LLC and Trent River Solar, LLC.
Of the seventeen Solar Projects owned directly or indirectly by the Purported Debtor Indemnitors, PGR contributed seven, which the Declaration states it did without disclosing to BBS that PGR and its leadership had purportedly added those entities as indemnitors of bonds issued in connection with unrelated projects, and contrary to representations and warranties PGR made at the time BBS made its investment. PGR then purported to join the remaining Purported Debtor Indemnitors as additional indemnitors under the GIA after they were contributed to the joint venture.
The Debtors believe PGR Manager entered into the indemnity agreement on their behalf without authority, violating BBS's express consent rights under the applicable governance agreements, and that any obligations so incurred were concealed from BBS at the time of its investment. They further believe the purported incurrence of additional obligations violated the terms of their project-level loan documents, with each unauthorized transaction likely constituting a default or event of default under the relevant credit agreements. In the Debtors' characterization, PGR wrongfully used the Solar Projects to purportedly collateralize the issuance of nearly $138 million of bonds for projects the Debtors neither own nor operate and from which the Purported Debtor Indemnitors receive no benefit. In the PGR bankruptcy, BBS filed claims against PGR, PGR Manager and certain affiliates for damages resulting from their conduct with respect to the Purported Debtor Indemnitors and the GIA, alleging gross negligence, mismanagement and breach of contract, and reserved the right to assert claims for fraud, intentional misrepresentation and willful misconduct against those parties and the individuals involved.
The Surety Litigation and Injunction Order
On or about October 22, 2025, the Surety demanded collateral from the Purported Debtor Indemnitors under the GIA, in cash or an irrevocable letter of credit, in the approximate amount of $134 million. The Debtors believe BBS became aware of the unauthorized commitment of the Purported Debtor Indemnitors' assets to support unrelated PGR projects when that demand was made. None of the Purported Debtor Indemnitors had the financial wherewithal to satisfy the demand because all of their assets were previously pledged to secure senior debt facilities.
On or about December 23, 2025, the Surety commenced litigation to enforce the GIA in the Supreme Court of the State of New York, County of New York, styled Atlantic Specialty Insurance Company v. Alpha Value Solar, LLC, et al. (the "Surety Litigation"), asserting a specific performance claim as to the collateral demand and a breach of contract claim for failure to comply with it, on a joint and several basis against each indemnitor. Shortly after filing, the Surety moved for a preliminary injunction requiring the posting of collateral. On July 10, 2026, the Surety amended its complaint and reduced its claim to $30,193,753.93, a reduction resulting from settlements resolving certain of the surety bonds covered under the GIA and the expiration of others. The Purported Debtor Indemnitors objected to the injunction motion, citing their inability to comply for lack of unencumbered assets.
On August 5, 2026, the New York Supreme Court entered the injunction order (the "Injunction Order"), requiring the Purported Debtor Indemnitors to deposit collateral security with the Surety in the amount asserted. On or about August 18, 2026, the Surety posted a bond in the same amount as the collateral demanded, satisfying the condition precedent for the injunction under New York law. On August 20, 2026, the parties stipulated that no collateral would be required before September 9, 2026. Efforts to reach a consensual resolution, both before and after the Surety Litigation commenced, left the parties far apart. Facing an imminent deadline to post tens of millions of dollars in collateral without the requisite liquidity, the Debtors filed to avoid potential contempt of court in the Surety Litigation.
Leverage and Cash Flow Deficits
Through 2025, the Solar Projects operated at a deficit after debt service, largely due to their significant debt burden and inability to operate at maximum capacity. Since the separation from PGR, the Debtors have focused on operational improvements, and while all of the Solar Projects generate revenue, a very substantial portion of their cash flow is consumed by debt service, with many continuing to operate at a deficit. All of the Solar Projects are projected to have long-term cash funding needs to cover projected cash flow deficits. The Declaration characterizes the Injunction Order as the catalyst that made a formal in-court restructuring necessary now, while stating that some or all of the Debtors would likely have required financial restructuring to address leverage even absent that order.
Chapter 11 Filing
The Debtors filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas on September 9, 2026 (the "Petition Date"), one day before a status conference set in the Surety Litigation for September 10, 2026. Rock Creek Advisors and Porter Hedges LLP were retained to explore and facilitate value-maximizing restructuring transactions. The stated goal is a strategic restructuring transaction that may include a Court-supervised sale process for substantially all of the Debtors' assets and business operations, to be conducted by Rock Creek Advisors.
Financing the Cases
The Debtors do not have sufficient cash on hand to run a sale process and intend to seek debtor-in-possession financing, having had preliminary discussions with Back Bay Capital. Before that financing is in place, the Debtors require cash collateral to fund operating expenses over an initial four-week period, and have sought their Prepetition Secured Lenders' consent to use it subject to an agreed budget. The Cash Collateral Motion proposes consensual use with adequate protection in the form of replacement liens and superpriority claims against diminution in the value of the Prepetition Secured Lenders' collateral.
First-Day Relief
The Declaration states that the relief sought at the outset was narrowed, in light of cash on hand and the limitations imposed by the cash collateral budget, to matters requiring urgent relief. Beyond cash collateral, the first-day motions seek authority to continue the existing cash management system, honor certain prepetition obligations and continue intercompany transactions, with a waiver of certain deposit requirements; to continue insurance coverage and the prepetition bonding program and satisfy related prepetition obligations, and to renew, amend, supplement, extend or purchase insurance coverage or surety bonds; to bar utility providers from discontinuing service and approve a proposed form of adequate assurance; to pay prepetition taxes and regulatory fees in the ordinary course; joint administration for procedural purposes; and an extension of time to file schedules and statements, together with authority to file a consolidated creditor matrix and a consolidated list of the 30 largest unsecured creditors and to redact certain personally identifiable information.
Key Dates
- June 12, 2019 – General Indemnity Agreement dated, with addendums through July 1, 2020.
- October 22, 2025 – Surety demands approximately $134 million of collateral from the Purported Debtor Indemnitors.
- November 6, 2025 – PGR and certain affiliates, including PGR Manager, file Chapter 11 in the Southern District of Texas.
- December 23, 2025 – Surety commences the Surety Litigation in New York Supreme Court.
- December 2025 – PGR court approves the PGR/BBS settlement providing for PGR Manager's exit; SunStrong Management becomes interim asset manager.
- May 2026 – Exit transaction closes; GoodFinch Manager becomes managing member and Class A member; SunStrong Management becomes permanent asset manager.
- July 10, 2026 – Surety amends its complaint, reducing the claim to approximately $30.2 million.
- August 5, 2026 – New York Supreme Court enters the Injunction Order.
- August 18, 2026 – Surety posts the prerequisite bond undertaking.
- August 20, 2026 – Parties stipulate that no collateral is required before September 9, 2026.
- September 4, 2026 – Craig R. Jalbert appointed Special Manager.
- September 9, 2026 – Petition Date.
- September 10, 2026 – Status conference set in the Surety Litigation.