TPI Composites Inc., a wind blade manufacturer operating under Chapter 11 bankruptcy protection, has filed an emergency motion seeking court approval for a transaction that would effectively exit its troubled Turkish operations while settling approximately $38 million in intercompany claims.
The Scottsdale, Arizona-based company filed the emergency motion on September 4, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, requesting approval by September 9 to meet a September 19 transaction deadline. The case is being heard under case number 25-34655 (CML) before Judge Christopher Lopez.
Under the proposed transaction, XCS Composites L.L.C-FZ would acquire equity interests in TPI's two Turkish manufacturing entities from non-debtor TPI Holdings Switzerland GmbH on an "as-is" basis, assuming all financial debt and liabilities of the Turkish operations. Notably, no cash will change hands for the equity acquisition.
The deal's most significant feature involves settling substantial intercompany obligations. TPI's debtor entities would release approximately $38 million owed to the Turkish entities, while the Turkish entities would release only about $7 million owed to TPI's debtors—creating a net benefit of roughly $31 million for the bankruptcy estates.
"The Transaction will provide substantial benefits to the Debtors, their estates, and their business as a whole," the company stated in court filings, citing the elimination of the intercompany debt and releases from potential litigation claims by Dere Construction Taahhüt A.Ş., a significant TPI equity holder and landlord for certain Turkish facilities.
Operational Crisis Drives Strategic Exit
The transaction stems from mounting operational challenges at TPI's Turkish facilities. According to a declaration by President and CEO William E. Siwek, three of the company's largest customers reduced or eliminated contracted volume for fiscal year 2025, creating significant headwinds that intensified amid prolonged inflation in Turkey.
The situation deteriorated further when a labor strike began in May 2025 at the two Turkish manufacturing facilities operated by TPI Kompozit Kanat Sanayi ve Ticaret Anonim Şirketi and TPI Kompozit Kanat 2 Üretim Sanayi ve Ticaret Limited Şirketi. "The strike completely halted the Company's ability to continue operations at the Turkish Entities, thereby eliminating revenue for the Turkish Entities and significantly reducing the Company's global revenue," Siwek stated.
The Turkish entities also carry approximately $70 million in loans from various Turkish banks, adding to the complexity of their financial situation.
Court Approval Under Time Pressure
TPI's legal team, led by Weil, Gotshal & Manges LLP, argues that the transaction represents sound business judgment under Section 363(b) of the Bankruptcy Code. The filing emphasizes four key benefits: substantial economic relief through debt elimination, enabling management to focus on restructuring rather than Turkish operations, avoiding potential litigation costs with Dere, and preserving jobs and supplier relationships.
The emergency nature of the request stems from the transaction's September 19, 2025, deadline. "Absent the satisfaction of all conditions precedent by September 19, 2025 (one of which is approval of the Transaction from the Court), there is a serious risk that XCS will walk away from the Transaction," the company warned in its filing.
The motion has garnered support from key stakeholders, including Oaktree Fund Administration, LLC and the official committee of unsecured creditors. Neither the U.S. Trustee nor the creditors' committee objects to the emergency hearing request.
Settlement Meets Bankruptcy Standards
For the intercompany claims settlement, TPI argues it meets the three-part test for "fair and equitable" treatment under Fifth Circuit precedent. The company contends that collecting the $7 million owed by the Turkish entities would be difficult given potential setoff rights against the larger $38 million obligation, uncertainty around Turkish operations due to the ongoing strike, and competition from other creditors including Turkish banks.
As part of the transaction, TPI Technology, Inc., one of the debtor entities, will enter into a transition services agreement and intellectual property licensing contract to facilitate the Turkish entities' continued operations under new ownership.
The case represents TPI Composites' broader effort to "right-size their capital structure, reduce operational costs, and improve profitability" following its August 11, 2025, Chapter 11 filing. The company's 22 debtor entities are being jointly administered under the Houston bankruptcy court's jurisdiction.
The transaction, if approved, would mark a significant step in TPI's restructuring process as the wind energy industry continues to face challenges from supply chain disruptions and changing market dynamics in the renewable energy sector.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 47 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.