Tonopah Solar Energy, LLC filed for Chapter 11 bankruptcy protection on January 21, 2026, marking the second time in six years that the operator of a groundbreaking concentrated solar power facility has sought court protection as it struggles with recurring equipment failures that have cut the plant's energy production roughly in half.
The Tonopah, Nevada-based company owns and operates a 110-megawatt concentrated solar energy facility that was the first utility-scale solar plant in the United States to integrate molten salt energy storage technology, enabling it to generate electricity at night. However, the innovative facility has been plagued by four hot salt tank leaks since becoming operational in 2015, forcing the company to reduce operating temperatures and significantly diminish its revenue-generating capacity.
Case Overview
The company filed its voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware under case number 26-10060 with approximately $173 million in secured debt owed to affiliate lender Crescent Dunes Finance, Inc. and only about $598,000 in available cash. The filing comes after an extensive prepetition marketing process that contacted 253 potential buyers but failed to produce a stalking horse bidder.
Innovative Technology and Design
The Crescent Dunes Solar Energy Project represents a technological achievement in renewable energy. Unlike conventional solar facilities, the plant uses 10,347 mirror assemblies, known as heliostats, to concentrate sunlight onto a 640-foot receiver tower, where molten salt is heated to store thermal energy. This stored energy can then generate electricity for up to 10 hours after sunset, addressing intermittency challenges common to solar power.
The facility was originally designed to operate with molten salt heated to 1,050 degrees Fahrenheit. The technology was intended to provide clean, dispatchable power while avoiding the release of nearly 279,000 metric tons of carbon dioxide annually. The plant operates similarly to a rechargeable battery, utilizing solar energy to charge and later discharge as needed. Following construction, the facility was unique among solar energy plants for its use of non-degradable energy storage technology and its ability to load shift to peak periods or operate at night, allowing for electricity sales during highest grid-rate periods.
Recurring Equipment Failures
The plant has experienced four major hot salt tank leaks—in October 2016, March 2019, February 2022, and February 2023. The March 2019 leak forced operations to halt for more than two years. After the fourth leak in early 2023, the company made the decision to reduce operating temperatures to approximately 850 to 900 degrees Fahrenheit to prevent future equipment failures.
According to a declaration filed by the company's Chief Restructuring Officer, this temperature reduction has had severe financial consequences. The plant now generates approximately 55 megawatt-hours of electricity at maximum production, compared to roughly 100 megawatt-hours when operating at design temperature—a production decrease of about 45 percent. While the reduced temperature has successfully prevented leaks for more than two years, the diminished output has significantly impaired the facility's ability to generate revenue and service its debt obligations.
The company worked with engineering experts to inspect the hot salt tank, perform root cause analyses, and provide recommendations for repairs and remediation designed to prevent additional leaks. Based on these studies and internal analysis, the company determined to operate the hot salt tank at the lower temperature to reduce the risk of another leak and to reduce wear and tear on certain other plant components. Except for short-term stoppages for preventative and corrective maintenance, the plant has remained in service since July 2023.
Financial Structure and Related-Party Support
The company lacks a long-term power purchase agreement, which is typically essential for solar facilities to secure predictable revenue streams. The plant originally operated under a 25-year agreement with Nevada Power Company, doing business as NV Energy, but that utility terminated the contract in October 2019 following the extended operational shutdown caused by the second hot salt tank leak.
Since emerging from its first bankruptcy in late 2020, the company has operated under a series of short-term agreements with various counterparties. Currently, the facility sells power under a month-to-month arrangement with Switched On, LLC that is set to expire on February 21, 2026. This lack of long-term contracted revenue has made it difficult for the company to project sustainable cash flows.
The company's secured lender, Crescent Dunes Finance, is an affiliate controlled by the same corporate family as Tonopah Solar's parent company, Crescent Dunes Investment, LLC. Both entities are indirectly owned by Dragados, S.A., formerly known as ACS Servicios, Comunicaciones y Energia.
Court documents reveal that the affiliate lender extended significant financial assistance beyond its original commitments. After fully funding a $64 million revolving credit line approved in the 2020 bankruptcy, the lender contributed an additional $52.9 million to keep operations running. Rather than treating this amount as additional secured debt, the lender agreed to record it as equity contributions. The prepetition credit facility was increased to $73.5 million in August 2025 in anticipation of the bankruptcy filing.
Since October 2023, Tonopah Solar has not made any interest or principal payments on its debt, with the lender voluntarily forbearing from enforcing its rights. This forbearance allowed the company to remain current on ordinary course trade payables through the bankruptcy filing date. The lender permitted the company to stop making interest and other payments on the loans in 2023, all without any obligation to do so.
Prior Bankruptcy Case
Tonopah Solar's current Chapter 11 filing comes just over five years after the company successfully reorganized through its first bankruptcy case, which was filed on July 30, 2020 and confirmed on December 9, 2020. That earlier restructuring involved a $200 million cash payment to the U.S. Department of Energy, which had provided loan guarantees for the facility's construction, plus contingent obligations under a $100 million note that expired on December 31, 2023.
The 2020 case allowed the company to significantly deleverage its balance sheet and emerge with new debt financing from the affiliate lender. The company also entered into an operation and maintenance agreement dated July 30, 2020 with an operations contractor to handle the plant's day-to-day operations. The contractor operates the plant and generally collects a monthly management fee of $15,000, subject to adjustment for inflation, plus reimbursement for expenses.
Independent Investigation
To prepare for the second bankruptcy filing, the company's shareholder amended the operating agreement in March 2025 and appointed two independent managers to the board. On March 27, 2025, the board established a special committee comprised of the two independent managers to conduct an investigation of transactions between the company and its affiliates and potential claims and causes of action held by the company against insiders or other related parties.
The special committee retained independent legal counsel and an independent financial advisor. As part of the investigation, the special committee received access to the company's records, information, and key personnel.
The special committee issued two reports in summer 2025. A Phase I Report issued on July 18, 2025 concluded that the affiliate lender's prepetition claims against the company in respect of the prepetition loan and associated documents are valid, properly perfected, and unavoidable. The Phase I Report also concluded that the lender properly perfected its liens in all of the company's assets, with the exception of certain categories that do not exist or have minimal value.
A Phase II Report issued on August 18, 2025 concluded that the company does not hold any material claims or causes of action against any insiders or affiliates.
Restructuring Support Agreement and Milestones
On December 16, 2025, Tonopah Solar entered into a restructuring support agreement with its affiliate lender, parent company, and operations contractor. The agreement establishes a framework for a sale of substantially all assets under section 363 of the Bankruptcy Code, followed by confirmation of a prepackaged Chapter 11 plan that will distribute sale proceeds and wind down the debtor's affairs.
The restructuring support agreement includes milestones designed to move the case expeditiously:
- Within 24 hours of the petition date: File first day pleadings, DIP financing motion, the plan, and bidding procedures motion
- Within 50 days: Bid deadline under the bidding procedures order
- Within 55 days: Entry of final DIP financing order
- Within 80 days: Entry of sale order
- Within 125 days: Entry of order confirming the plan
- Within 225 days: Consummation of sale pursuant to sale order
- Within 240 days: Effective date under the plan
Debtor-in-Possession Financing
To fund operations during the bankruptcy case and facilitate the sale process, the affiliate lender has agreed to provide a $10 million debtor-in-possession financing facility. The DIP loan will be senior secured with super-priority administrative expense status. According to a supporting declaration filed with the DIP motion, the company and its advisors attempted to identify alternative DIP financing sources but were unable to secure any third-party commitments. The affiliate lender would not consent to another lender priming its existing first-priority liens, and no party was willing to provide junior financing.
The company estimates that it will require approximately $10 million of liquidity to maintain ordinary course operations and fund the administrative costs of the chapter 11 case. The DIP facility provides favorable terms to the debtor, including favorable interest rates, no financing fees, and sufficient funding to operate the plant, conduct the postpetition sale process, and confirm a chapter 11 plan on a reasonable timeline.
The debtor's access to the DIP facility is described as crucial liquidity to allow the debtor to continue running a postpetition sale process, consummate a sale transaction, and maximize the value of its estate for the benefit of all stakeholders.
Marketing Process
The company retained an investment bank in May 2025 to conduct a comprehensive marketing process. The investment bank prepared a teaser, confidential information memorandum, virtual data room, buyer list and other related diligence materials. The company formally launched its renewed marketing process on May 21, 2025.
As part of the sale process, the investment bank contacted 253 potential buyers—129 strategic buyers that were selected based on their business model, historical acquisition activity and financial capabilities, and 124 financial buyers and investors that were selected based on their historical interest in the solar energy industry, existing and past investments and financial capabilities. As of the petition date, 13 of those parties executed confidentiality agreements and received the confidential information memorandum and related information, as well as virtual data room access to conduct diligence.
The prepetition marketing process generated interest in the company's assets and yielded several indications of interest, all of which contemplated a bankruptcy sale process. The company engaged in advanced discussions with one potential buyer, which delivered a non-binding term sheet contemplating a purchase of the company's assets through an in-court sale process. The parties entered into an exclusivity agreement that was ultimately extended through October 15, 2025. Despite the exclusivity agreement, the company and its investment bank were free to continue marketing the assets and to facilitate diligence by other parties. The prepetition marketing process did not result in an actionable bid for the assets.
In November 2025, a new potential buyer expressed interest in the assets, and in December 2025, the company provided this potential buyer with access to the virtual data room and a site visit. The company continues to advance discussions with this party about a possible transaction.
Pending Litigation
Tonopah Solar faces pending litigation with CMB Infrastructure Investment Group involving multiple legal proceedings across different forums. The disputes stem from loans CMB entities made to fund equity commitments during the plant's development and construction phase. CMB loaned $90 million to an indirect subsidiary of SolarReserve and $80 million to an entity affiliated with another equity investor. The $80 million loan was fully repaid in April 2018. The borrower on the $90 million loan allegedly failed to repay a significant portion of that amount.
CMB filed suit in Clark County, Nevada state court in May 2020, asserting contract and tort claims against Tonopah Solar, various affiliated entities, and other defendants. The case was removed to the U.S. District Court for the District of Nevada in February 2021.
Following motion practice, the district court compelled arbitration of most claims before the International Chamber of Commerce and stayed the Nevada district court action pending conclusion of the arbitration. The case proceeded to a hearing before the ICC in September 2023.
In January 2024, the ICC issued an award that rejected all claims CMB brought on its own behalf. The ICC determined it did not have jurisdiction to decide certain claims CMB brought as an assignee, so it did not decide those claims. The ICC also awarded the defendants approximately $2.4 million in attorneys' fees and costs, payable jointly and severally by CMB.
In October 2024, the Nevada district court confirmed the ICC award, denied CMB's motion to vacate the award, awarded pre- and post-judgment interest on the award, and granted the defendants' motion to compel arbitration of the remaining claims. In June 2025, the district court entered judgment in favor of the defendants against CMB in the amount of approximately $2.4 million as awarded by the ICC, plus approximately $80,000 in prejudgment interest, and post-judgment interest computed daily from October 15, 2024 at a rate of 4.22 percent, compounded annually. CMB paid the judgment on October 30, 2025.
On July 11, 2025, CMB submitted its request for arbitration of the remaining claims to the ICC. On July 16, 2025, CMB filed a notice of appeal from the judgment to the United States Court of Appeals for the Ninth Circuit. CMB submitted its opening brief in the appeal on November 21, 2025, with answering briefs currently due January 21, 2026.
Qui Tam Action
Separately, on January 28, 2020, an entity related to CMB filed a qui tam action as relator in the Nevada district court against defendants including Tonopah Solar, alleging violations of the False Claims Act in connection with cash grants from the U.S. Department of the Treasury made available to the company under Section 1603 of the American Recovery and Reinvestment Tax Act.
While the case was under seal, the United States Department of Justice investigated the allegations and on June 1, 2023 declined to intervene. The case was unsealed on January 24, 2024. On April 19, 2024, the relator filed a second amended complaint adding an additional defendant.
On November 7, 2024, the Department of Justice filed a motion to intervene in the qui tam action and to dismiss the action under a section of the False Claims Act that allows for intervention for purposes of dismissal by the government. On July 18, 2025, the Nevada district court granted the motion to dismiss. The relator appealed the dismissal to the Ninth Circuit Court of Appeals on September 12, 2025. The relator filed its opening brief on December 29, 2025, with answering briefs currently due on January 30, 2026.
Automatic Stay Relief
The company has filed a motion requesting that the bankruptcy court lift the automatic stay solely with respect to the CMB litigation. The filing of the petition operates as a stay of any prepetition action or proceeding against the debtor and any prepetition actions to recover claims against the debtor under section 362 of the Bankruptcy Code. The company is seeking to lift the automatic stay solely with respect to the CMB litigation to allow the company to expeditiously resolve CMB's claims.
CMB's potential claims are secured by a $6 million letter of credit. The letter of credit was obtained in connection with the approved plan in the 2020 bankruptcy case. The letter of credit secures the company's potential liability to the CMB litigation claimants, applicable only if any such claimant obtains a final and non-appealable money judgment with respect to the Nevada district court action and ICC arbitration, and the letter of credit may only be drawn by CMB in accordance with the plan in the 2020 case.
Additional Financial Obligations
In addition to the secured obligations owed to the affiliate lender, an affiliate of the company obtained the $6 million letter of credit for the benefit of CMB. In addition, the company is party to a $2.5 million escrow agreement to backstop potential indemnification claims of certain former managers of the company, which may also be entitled to insurance coverage.
In the ordinary course of business, the company incurs unsecured obligations to various suppliers, trade vendors, utility providers, and services providers, among others. To the best of the company's knowledge, the company is current with respect to its ordinary course trade payables as of the petition date.
All of the available cash constitutes cash collateral of the prepetition lender. The company collateralized its obligations under Bureau of Land Management right-of-way grants, including potential decommissioning costs, by posting a deposit of approximately $13.2 million with the BLM.
First Day Relief
Along with the bankruptcy petition, Tonopah Solar filed numerous first-day motions seeking authority to maintain business operations during the Chapter 11 case. The company filed motions seeking:
- Approval of the $10 million DIP financing facility and authority to use cash collateral
- Authority to continue operating its existing cash management system and honor prepetition obligations related thereto
- Authority to honor and pay prepetition compensation obligations to independent contractors
- Authority to maintain and administer customer programs and honor prepetition business practices related thereto
- Approval of the retention of a claims and noticing agent
- Authority to prohibit utility companies from altering, refusing, or discontinuing utility services
- Authority to pay certain prepetition taxes and fees and related obligations
- Authority to redact certain personally identifiable information of natural persons
- Relief from the automatic stay solely with respect to the CMB litigation
Customer Programs and Operations
The company currently participates in Nevada Tracks Renewable Energy Credits, a state-run program designed to encourage the growth of renewable energy in Nevada. Through this program, renewable energy producers can earn and sell tradable certificates representing clean energy or energy savings that can be purchased by utilities to satisfy State of Nevada renewable portfolio standards.
Under the current short-term power purchase agreement with Switched On, the company sells energy produced at the plant together with renewable energy benefits, including portfolio energy credits that are created from, or in connection with, the generation of energy. While the purchaser has already paid for certain customer programs produced in 2025, the state program has yet to certify the related portfolio energy credits for transfer in the system. The company is seeking authorization to continue to honor the customer obligations that were paid for before the petition date but not yet delivered.
Operational Structure
The company leases land from the Bureau of Land Management of the U.S. Department of the Interior and occupies 1,620 acres of land on a 2,250-acre site. The BLM lease term runs through December 31, 2039, with potential for renewal upon application to and approval by the BLM. The annual cost of the lease was approximately $250,000 for 2025.
The company holds purchased water rights and associated permits sufficient to meet the plant's operational needs. The current permit provides for a combined water duty of up to 562.29 acre-feet annually. The plant is connected to the Nevada electricity grid via a 5.6 mile, 230 kilovolt transmission line that links the plant to a nearby station.
The company obtains operational support from third party contractors. Under the operation and maintenance agreement, the operations contractor supplies the personnel needed to operate the plant. As of the petition date, the company has no employees of its own. The company currently utilizes the services of three independent contractors to perform key services unrelated to the direct operation of the plant. These services include bookkeeping, financial and accounting, management advisory, business and strategic consulting, and general counsel legal support.
Proposed Chapter 11 Plan
The company anticipates filing a combined disclosure statement and chapter 11 plan early in its chapter 11 case that will provide for the distribution of sale proceeds in the event of a successful sale and a wind-down of the company's affairs. The company anticipates that any recovery to allowed, undisputed, non-insider general unsecured creditors under the plan would be funded by a carve-out from the affiliate lender's collateral if sale proceeds are insufficient to pay the lender's allowed secured claim in full.
The company anticipates that CMB's claims will be unimpaired under the plan to the extent such claims are eventually allowed. CMB's potential claims are secured by virtue of the letter of credit that was posted under the confirmed plan in the 2020 bankruptcy case, which letter of credit will remain in place after the effective date of the plan. CMB's potential claims will also remain subject to setoff with respect to all amounts that CMB may owe to the company, including through future arbitration awards.
Following confirmation, the plan will provide for the appointment of a plan administrator to manage the company's wind-down, including its continued defense of the CMB litigation and disposition of any related residual assets. The plan administrator will not engage in the conduct of a trade or business. Upon the occurrence of the effective date of the plan, the current members of the board, including the independent managers, will resign, and the plan administrator will have authority to implement the plan and take all actions necessary to wind up the company's affairs.
Development History
Tonopah Solar Energy was formed in February 2008 by SolarReserve, Inc. to develop a solar energy power plant in the Nevada desert. Also known as the Crescent Dunes Solar Energy Project, the plant was designed to utilize a molten salt receiver to generate power.
The plant's development, financing and construction was dependent on three key factors: securing a utility to purchase the plant's renewable, clean power under a long-term power purchase agreement; identifying a construction company to assume the risks associated with a required turnkey fixed-price engineering, procurement and construction contract; and obtaining a loan guarantee from the Department of Energy.
After extensive negotiation and a protracted regulatory approval process, the company entered into a power purchase agreement with Nevada Power Company in November 2009. The first PPA, entered into before the company constructed the plant, was for a twenty-five-year term. The utility would be the exclusive offtake purchaser of the power generated by the plant once construction of the plant was complete.
In December 2009, the developer applied for a loan guarantee from the Department of Energy, and the company executed an engineering, procurement and construction contract with a construction company. Under the EPC contract, the contractor agreed to provide engineering, procurement and construction services for the plant at an initial fixed price amount of $766.4 million. The company also obtained equity investments from the developer, an affiliate entity, and Banco Santander. Financial closing with the Department of Energy for the development and construction of the plant occurred in September 2011 and a notice to proceed with construction was issued later that same month.
The plant commenced commercial operations and production in November 2015, upon synchronization with the utility's grid. The company anticipated that the plant would generate at least 600 construction jobs and 45 permanent jobs and would avoid the release of nearly 279,000 metric tons of carbon dioxide into the atmosphere annually that would have been produced through conventional electricity generation technologies.
Current Ownership
All of the equity interests in Tonopah Solar Energy are owned by Crescent Dunes Investment, LLC.
The case is pending in the United States Bankruptcy Court for the District of Delaware under case number 26-10060.
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