Earlier this week Suntech Power Holdings Ltd., the Chinese solar manufacturing giant revealed that it defaulted on a $541 million bond payment. Today the company announced that eight of its creditors, Chinese banks have filed for insolvency and restructuring charges against the company’s Wuxi Suntech subsidiary—its principal subsidiary, which handles most of its manufacturing. The company has been experiencing a remarkable landslide over the past half year or so, which included a business partner that faked $680 million in collateral on a loan guaranteed by the company, but this may be a pretty indicative step as to where its going.

At this point, however, the company isn’t waving a white flag. "While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base," said David King, Suntech's CEO. "During this period, we will continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth."

The default is higher than the $535 million loan guarantee that Solyndra received that led to the company becoming a political punching bag. But Suntech is just the latest company to suffer big losses as solar manufacturers continue to compete at lower margins.

This latest backslide for the giant silicon PV manufacturer started last week when it announced on March 11 that it entered into a forbearance agreement with holders of over 60 percent of its 3 percent convertible notes. The principal payment of $541 million for the notes was due March 15. On March 14 it said it was contacted by the New York Stock Exchange, “Regarding today's unusual trading activity relating to its American depositary shares. Management of the Company is not aware of undisclosed events that triggered such trading activity.”

As this week began the company announced that indeed it did not make the payment. On March 18 it said, “Such event of default has also triggered cross-defaults under Suntech's other outstanding debt, including its loans from International Finance Corporation and Chinese domestic lenders.” It also said: “As previously announced, Suntech has entered into a forbearance agreement with holders of over 60 percent of the notes, one of the terms of which is that the forbearing note holders will cooperate with Suntech in addressing certain legal proceedings that may be initiated against it. Suntech understands that those note holders have also requested the trustee under the Notes not to take any further action as consensual restructuring discussions continue. Suntech is thus far unaware of any legal proceedings initiated by any note holders against the Company.”

If the Wuxi Municipal Intermediate People's Court in Jiangsu Province, China, decides to proceed with insolvency hearings the Chinese court will typically appoint administrators to Wuxi Suntech to administer the restructuring, including negotiations with existing bank lenders and other creditors, the company said. If such proceedings occur, the company will file to continue operations during restructuring.