Why We're Maintaining Our SunEdison Inc (OTCMKTS:SUNEQ) Long Bias

One of the most watched stocks here at Insider Financial over the last few quarters has been SunEdison Inc (OTCMKTS:SUNEQ). As recently as earlier this month, we concluded that the company's current shareholders, however embattled in light of the crash since the chapter 11 announcement, could benefit from holding their position and waiting out the downside pressure. Sooner or later the shorts would get squeezed, and it wouldn’t take much to kick off an upside run as the shorts rushed to cover.We just got that run.The company is up close to 40% on the week, and 120% since we said it was worth staying put. The question now, is whether there's room for more upside medium term? Should shareholders take their money and run, or is there room for additional upside? The latter looks very plausible right now.SunEdison took a hit back in August when a court declined its application for shareholder representation in the bankruptcy process by way of an equity committee (EC). For those not familiar with ECs, they are an entity appointed to represent the shareholders in a company that has filed for bankruptcy. Normally, shareholders aren’t represented (except by the company itself, and this has obvious conflicts) in bankruptcy proceedings. They are last in line for any share of the deconstructed pie, and rarely get any sort of return on their holdings.In certain circumstances, however, a court will approve an EC if it feels the shareholders won't be represented effectively during the hearing. Pretty much always, this appointment comes on the back of some level of misrepresentation of value in the initial process. More and more, however, and as pointed out by Forbes here, judge are overlooking the traditional check boxes and accepting EC requests for more abstract reasons.Now, there's the potential for an appeal on a court decision to turn down an EC, and we think this potential is playing into the SunEdison uptick. Breitburn Energy Partners LP (OTCMKTS:BBEPQ) just had its own EC approved based on the rising value of oil, and the impact this has on its asset valuation when compared to its valuation at bankruptcy filing time.Some of SunEdison's assets (most notably its majority owned yieldcos TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global Inc (NASDAQ:GLBL)) have both increased in value since filing, and this opens up the possibility for an appeal based on a similar approval factor as that of Breitburn.If an appeal is successful, SunEdison shareholders can pick up a seat at the table and argue their case for a return. Any increased level of return would add value to the current worth of the share base, and that's where the upside potential lies.Bankruptcy aside, however, there's a secondary potential for a long term upside – a clean emergence from the process. The company is attempting to restructure its assets by way of a reorganization plan that would see it maintain its controlling stake in the above mentioned TerraForm Power. If it can achieve this maintenance, the company would come out of the process as the parent of TerraForm, with no assets outside the latter, but owning what looks right now to be a very successful commercial and residential solar and wind power asset – one currently valued at the open market at a little over $1.8 billion. As of themost recent filings, SunEdison owns circa 35% of TerraForm Power, and controls just shy of 85% of voting rights by way of its Class B shareholding.In either of these scenarios, we see upside. Either the company goes into liquidation and shareholders appeal the EC decision to pick up a table seat in negotiations, or SunEdison reorganizes and emerges with no debt and a controlling stake in a leading alternative energy entity.Our bias throughout this process has been to hold, and we maintain that bias.We will be updating our subscribers with the latest on SunEdison. For the latest updates, sign up below!Disclosure: We have no position in SUNEQ and have not been compensated for this article.