When Solar Finance Giants Reach The Bankruptcy Stage of Its Scheme: How to Safeguard Your Consumer Rights

This just in, Solar Mosaic LLC, a major player in residential solar financing, filed Chapter 11 bankruptcy, see In re Mosaic Sustainable Finance Corporation, Case No. 25-90156 (Bankr. S.D. Tex. (Hou.).  With estimated assets and liabilities between $1 billion and $10 billion, the Oakland-based company has faced significant challenges due to macroeconomic factors, including high interest rates, unsupportive federal legislation and the potential rollback of solar tax incentives. Mosaic has facilitated loans for over 500,000 solar installations since its founding in 2010. However, recent market uncertainties, particularly the U.S. House of Representative’s advancement of a tax bill that could eliminate residential solar tax credits, led Mosaic to halt new loan approvals and seek restructuring through bankruptcy. The company aims to remain operational during this process, maintaining its loan servicing operations, which they will continue to profit from while trying to sell the consumer debt wholesale to vulturous investors, and discharging the rest. The bankruptcy filing comes amid a broader crisis in a residential solar industry in freefall, as Sunnova went bankrupt in the last week too. Mosaic’s filing highlights the industry’s struggles with high borrowing costs, reduced demand, and policy shifts, but also rampant fraud in sales, installation and financing practices.

Claims Against Solar Finance Companies

Many homeowners who financed solar panel installations through Mosaic and similar companies have reported issues, including incomplete installations, non-functional systems, and deceptive sales practices. These grievances have led to lawsuits and arbitration claims, often targeting both the installers and the financing companies. Protests in 2024 at Mosaic’s California headquarters saw over 100 homeowners demand loan cancellations, alleging that Mosaic paid contractors for work that was not started or completed, leaving them in substantial debt for faulty or non-existent systems, which led to the Minnesota Attorney General filing a class action suit against them and others.

The Federal Trade Commission’s Holder Rule (16 C.F.R. 433) is critical for consumers in these cases. This rule allows borrowers to assert claims against the lender (e.g., Mosaic) that they could assert against the seller (e.g., the solar installer) if the financed goods or services are defective or not delivered as promised. For instance, if a contractor misrepresented a solar system’s capabilities or abandoned a project, the borrower could potentially withhold payments or seek loan cancellation from the lender.

Why Consumers Should File Cases Before Solar Finance Companies Go Bankrupt

1. Preserving Claims Before Bankruptcy Complications: When a company like Mosaic files for Chapter 11, an automatic stay is imposed under section 362 of the Bankruptcy Code, stopping all legal proceedings against it. Filing cases before then allows consumers to establish their claims and potentially secure a favorable resolution before the company’s financial situation deteriorates further.
2. Leveraging the Holder Rule: It provides a strong legal basis for holding finance companies accountable for installer misconduct. By initiating arbitration early, consumers can pressure lenders to settle claims, if the lender fears reputational damage or regulatory scrutiny but especially.  As one of our lawyers put it, when companies like Mosaic are in restructuring, there is no better time to try and get a loan rescinded because they are looking to cut losses and come out more solvent.  They are in business decision mode, so are a lot more practical.
3. Avoiding a Flood of Claims: As more solar scammers face financial distress – as evidenced by Sunnova’s concurrent bankruptcy filing just last week – courts and arbitration forums may become overwhelmed with claims. Filing early ensures that a consumer’s case is processed before resources are stretched thin or bankruptcy proceedings further complicate recovery.  Make hay while the sun shines.
4. Potential for Pre-Bankruptcy Settlements: Before bankruptcy, companies may be more willing to settle claims to avoid costly litigation or negative publicity. Mosaic’s history of customer complaints, including allegations of poor customer service and unauthorized payments to contractors, suggests that early arbitration could prompt settlements to mitigate these issues.  Our firm has a long history of obtaining favorable settlements for our clients.  Just last month we negotiated with a service finance company and got our client a total write-off of a $100,000+ loan, reimbursement of all payments made and the client was allowed to keep the panels for free!  Right now we are finalizing another similar settlement with a titan of the industry and just last week the client wrote to us “Reviews 10 stars are for sure everywhere and referrals with people affected like us are a 100%.”

Strategic Recommendations

Given the solar industry’s ongoing challenges, consumers who believe they were scammed by Mosaic or its partner contractors should consider the following steps:

• File Arbitration Claims Promptly Against Mosaic: Since Mosaic has already filed for bankruptcy, filing a proof of claim now could help establish a claim before the Chapter 11 process advances further and help with a motion for relief to lift the stay. Consumers should document misconduct, such as incomplete installations or misrepresentations about system performance or tax credits.
• Monitor Other Solar Finance Companies: Companies like GoodLeap and Dividend have faced similar allegations of deceptive practices. Consumers should stay informed about their financial statuses through news reports or regulatory announcements. If signs of insolvency emerge, filing arbitration (against GoodLeap) or litigation (against Dividend) early could be advantageous.
• Gather Documentation: Consumers should collect contracts, loan agreements, communication with installers or lenders, and evidence of system performance (utility bills showing no savings, monitoring apps). This is critical for legal actions.
• Seek Legal Advice: Attorneys specializing in consumer protection, such as the Joshua S. Horton Law Firm, can help evaluate claims and navigate these legal mazes.  In the right hands, even a broken mosaic can be made whole.  We are the voice for the voiceless, admitted in Washington D.C. & Florida and can arbitrate nationwide so call us now on (561) 448-1555 or e-mail us at solar@joshuahortonlaw.com.