The bankruptcy of SunEdison took an interesting turn with a court filing by an attorney for one of SunEdison’s creditors. The filing, based on an investigation that the SunEdison board launched after receiving reports from employees, alleges that McKinsey and SunEdison executives worked together to be sure that McKinsey was paid. The scheme alleged was one of McKinsey no longer directly billing SunEdison but calling back its unpaid bills and then rebelling them to several solar projects for SunEdison customers.
Problem with the scheme? McKinsey had not done any work on those projects. In fact, e-mails setting up the plan have a McKinsey partner writing, “Acknowledge that this is not ideal,” and that “we should anticipate some spirited opposition from PMs (project managers).” Spirited opposition? If you were a PM and suddenly got bills for your project for which there was no work, you bet your boots you would push back. Hence, the SunEdison employees reports to the company about cash flow issues. Hence, the investigation.
In bankruptcy, scheming to get paid ahead of other creditors before bankruptcy is declared is prohibited, and the court is permitted to call back any such payments. When there is deception involved in getting the payments, well, the court has broad discretion. The creativity of McKinsey is stunning. And creativity may be a charitable term. The pleading asks for McKinsey to return $37 million in fees paid through the arrangement. Ah, the doctrine of voidable preferences. Ah, the tangled webs we weave that are foiled through our own e-mails.