Spruce Power Holding Corporation — financial distress indicators
Financial-health summary
Spruce Power Holding Corporation's reported numbers place it in the 'Very weak' financial-health band (distress score 100/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and severe working-capital shortfall. Independently, the Ohlson accounting model puts its 1-year failure probability at 91% and the market-implied (Merton) default probability is 76.7%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is 0.45×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -0.73 σ → PD 77%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.48 (current assets cover 48% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Total debt is 10.0× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 2.31 → model probability 91%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Short-term debt is 4.3× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Price is -76% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
1 severe and 0 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Revenue still growing (+36% YoY).
📰 Recent news scan
- going concernSpruce Power Holding Corp (SPRU) (Q2 2026) Earnings Call Highlights: Strategic Cost Cuts Drive ...Yahoo Finance · 2026-08-13
- Spruce Power to Release Second Quarter 2026 Results and Host Conference Call on August 12Yahoo Finance · 2026-07-31
- Spruce Power Falls 17% in a Month: Should You Buy the Dip?Yahoo Finance · 2026-07-10
- Spruce Power Announces Company-Wide AI Transformation InitiativeYahoo Finance · 2026-06-24
- Spruce Power (SPRU) Q4 2025 Earnings TranscriptYahoo Finance · 2026-06-01
- Spruce Power Incurs Q1 Loss, Narrows Y/Y Due to Cost CutsYahoo Finance · 2026-05-20
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Spruce Power Holding Corporation's financial-health indicators show?
As of 2026-10-08, Spruce Power Holding Corporation's public financial data places it in the 'Very weak' band with a distress score of 100/100, driven by operating profit does not cover interest, market-implied default probability >20% and severe working-capital shortfall. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Spruce Power Holding Corporation's financial distress score?
100/100 ('Very weak'). Ohlson O-score 2.31 (model 1-year failure probability 91%). Merton distance-to-default -0.73 σ (model default probability 76.7%).
What works in Spruce Power Holding Corporation's favour?
Operating cash flow is positive over the latest 12 months. Revenue still growing (+36% YoY).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Energy, Oil & Gas companies with distress indicators
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- SolarMax Technology, Inc. (SMXT)Very weak 100/100
- Vivakor, Inc. (VIVK)Very weak 100/100
- SUNation Energy Inc. (SUNE)Very weak 86/100
- Canadian Solar Inc. (CSIQ)Very weak 74/100
- SunPower Inc. (SPWR)Very weak 73/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.