Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 818

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1C
Chunk 818
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4000, New York, NY 10004.

Item 3. Legal Proceedings

From time to time, we may become involved in various
lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. Other than the
following matters, we are not aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse
effect on its business, financial condition or operating results.

On October 15, 2024 Sunrise Development LLC (“Sunrise”)
requested a hearing be scheduled in binding arbitration against the Company, two of its former indirect wholly owned subsidiaries,
ALT US 03 and ALT US 04, and a related party, Alternus Energy Group PLC (“AEG”), to be conducted in Minneapolis, MN in accordance
with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”), claiming that approximately
$5 million is due and owed to Sunrise pursuant to a settlement agreement by and among the parties, plus costs, expenses, legal fees and
interest. On or about February 6, 2025, the Company entered into a second set of settlement terms with Sunrise, pursuant to which the
Company agreed to make certain monthly payments to Sunrise, related to amounts allegedly owed by one of the Company’s former subsidiaries
pursuant to a share purchase agreement, and in exchange Sunrise dismissed its arbitration case against the Company. As of March 10, 2025,
the Company breached its payment obligations under the settlement terms. As a result, upon breach in March 2025, Sunrise alleges that
approximately $5.7 million is immediately due and payable by the Company to Sunrise. Sunrise has commenced proceedings to file a stipulation
with the arbitrator, under which the arbitration award would be entered against the Company. The Company is defending itself in this matter,
claiming that a portion of this amount has already been repaid. The Company has accrued a liability for this loss contingency in the amount
of approximately $5 million, which represents the contractual amount allegedly owed. It is reasonably possible that the potential loss
may exceed our accrued liability due to costs, expenses, legal fees, and interest that are also alleged by Sunrise as owed, but at the
time of filing this report, we are unable to determine an estimate of that possible additional loss in excess of the