Suntech has been driven to the financial brink by an obligation to pay more than $541 million to holders of convertible bonds at the end of this week. It stopped releasing financial reports last year after disclosing in July that it had invested in €530 million, or $690 million, worth of German bonds that might prove fraudulent. The company's cash reserves have been dwindling, according to analysts, and Chinese state-owned banks have become reluctant in recent months to keep extending further loans.
The company reached a deal with three-fifths of the bondholders early this week to give it a two-month reprieve to find an answer to its financial troubles.
It was unclear late Wednesday what terms might be offered to Suntech's bondholders or long-suffering shareholders; the latter would have to approve any merger.
Suntech announced on Tuesday that it was closing its factory in Goodyear, Arizona, at the cost of 43 jobs there. The factory put aluminum frames and electrical junction boxes on solar cells imported from China, so that the fully assembled solar panels would qualify for "Buy American" programs.
The collapse of Suntech is a milestone in the precipitous decline of China's green energy industry over the past four years. More than any other country, China had bet heavily on renewable energy as the answer to its interlinked problems of severe air pollution and heavy dependence on energy imports from politically unstable countries in the Middle East and Africa.
China is also very exposed to global warming along its low-lying, densely populated coastline, which the Energy Department in Washington has estimated to have more people vulnerable to displacement from rising sea levels than anywhere else on earth.
But China's approach to renewable energy has proved ruinous, both financially and in terms of trade relations with the United States and the European Union.
State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing a more than 10-fold increase in production capacity from 2008 to 2012. This triggered a 75 percent drop in panel prices over the same period, which resulted in Chinese companies' losing up to $1 for every $3 in sales last year.
The huge loans and very low prices prompted SolarWorld, a German company, and its American subsidiary to file anti-dumping and anti-subsidy cases in the United States and the European Union against solar panel exports from China. The United States has responded with roughly 40 percent tariffs on solar cells and solar panels from China, and the European Union is concluding its deliberations and is expected to deliver an initial verdict this summer.
Yotam Ariel, the managing director of Bennu Solar, a Shanghai consulting firm, said that the closing of the Arizona factory "is yet another indication of a tough struggle."
Ocean Yuan, the president of Grape Solar, an importer of solar panels based in Eugene, Oregon, said that a takeover of Suntech by Wuxi Guolian should help the municipal government save at least some of the roughly 10,000 jobs there that could be lost in a liquidation of the company.
Suntech's demise as an independent company comes as the long decline in solar panel prices may be leveling off — but not to the benefit of manufacturers.
As Chinese state-owned banks have stopped extending credit on extremely generous terms, solar panel exporters in China have lost the ability to let their buyers wait up to four months before paying for deliveries, Mr. Yuan said. Now, even the Chinese manufacturers' archrivals in Taiwan have begun demanding payment on delivery, he said, a development that is putting financial stress on solar panel installers in the United States that may not have large bank credit lines themselves to finance inventories.
Wuxi Guolian is a sizable enterprise. According to its Web site, the company was set up by the Wuxi municipal government in May 1999 and now has 75 wholly owned subsidiaries with total assets of 42.6 billion renminbi, or $6.9 billion, active in financial services and real estate.
Wuxi is a large industrial city located 120 kilometers, or 70 miles, northwest of Shanghai.
—By The New York Times' Keith Bradsher