According to the complaint, during the Class Period, Cross River Bank (CRB) engaged in a scheme to extend loans to disreputable solar contractors of dubious credit quality and facilitate Sunlight’s accumulation of a large loan pools of fixed-rate loans on CRB’s balance sheet for which Sunlight retained the risk of loss. These loans contained enormous levels of risk of default and interest rate risk for Sunlight, but Sunlight lacked the necessary capital to tolerate a default or significant rise in interest rates.

Neither Sunlight nor CRB disclosed to Plaintiff and the Class the magnitude of that risk or, when interest rates increased, the extent of Sunlight’s mounting off-balance sheet liabilities (which were being warehoused on the balance sheet of Sunlight’s Bank Partner, CRB).

CRB’s repeated extensions of credit and agreement to help Sunlight conceal its true indebtedness from investors by having it recorded in CRB’s books, coupled with Sunlight’s false statements about its true loan exposure, kept Sunlight’s true financial distress a secret from investors, which kept the price of Sunlight’s shares artificially inflated during the Class Period.

A series of disclosures beginning on September 28, 2022 revealed the true state of Sunlight’s financial picture. For instance, on that date, Sunlight announced that it was taking a non-cash advance receivable impairment of $30 to $33 million stemming from liquidity issues by one installer. Sunlight’s stock price plummeted 57%, or $1.44 per share, on the news, falling from a closing price of $2.52 per share on September 28, 2022 to a close of $1.08 per share on September 29, 2022.

The truth continued to be incrementally revealed to investors until October 31, 2023, when investors fully learned of CRB’s fraudulent scheme. On that date, Sunlight announced it had filed for Chapter 11 bankruptcy with a pre-packaged plan whereby CRB would provide exit financing in return for 12.5% of the New Equity in the reorganized company. Under the plan, the interests of Plaintiff and the other common stockholders of Sunlight were extinguished. On this news, shares of Sunlight fell $0.13 per share, or 34%, from a closing price of $0.38 per share on October 30, 2023 to a close of $0.25 per share on October 31, 2023.

Investors who purchased or acquired Sunlight securities between January 25, 2021 and October 31, 2023, may no later than December 2, 2024, seek to be appointed as a lead plaintiff representative of the class.