CGB's subordinated position behind $600M Wall Street debt: How public funds became "first loss" capital to protect Brookfield Asset Management
PosiGen is NOT in bankruptcy liquidation. Instead, it is in severe financial distress involving a default on $600 million in senior debt held by Brookfield Asset Management. CGB has filed a lawsuit alleging that Brookfield "manufactured" the default and is using it to seize control of PosiGen's assets—potentially wiping out CGB's $30 million subordinated position.
Case Details:
Connecticut Green Bank v. PosiGen, PBC et al.
U.S. District Court, District of Connecticut
Docket No. 3:2025cv01841 | Filed: October 30, 2025
Holds $30M subordinated debt
Negotiates with Brookfield
Ben Healey, as PosiGen President, negotiated the Brookfield $600M senior facility that subordinated his former employer (CGB) to last position. He had insider knowledge of CGB's risk tolerance, decision-making processes, and political constraints from his 7 years designing their financing structures.
with $30M second-lien credit agreement (subordinated debt)
→ becomes PosiGen CFO, then President
as senior lender via BID Administrator LLC
to seize control of PosiGen assets
alleging tortious interference and fraudulent transfer
Brookfield proceeds with asset seizure
The PosiGen case exemplifies "moral hazard" embedded in CGB's operating model: the financial structure was deliberately engineered to ensure that ratepayers lost first and Wall Street was protected. This was not an unfortunate accident—it was a contractual design that converted public funds into an insurance policy for private wealth.
In structured finance, the "capital stack" determines who gets paid in what order. The priority of payment dictates risk allocation. Senior lenders are paid first; junior lenders are paid last—if anything remains.
By accepting a subordinated position, CGB transformed $30 million in ratepayer funds into what the industry calls "first loss" capital—the money that absorbs all downside risk before private investors lose a single dollar.
First-Lien Position
Brookfield Asset Management
Rights & Protections:
Second-Lien Position
Connecticut Green Bank
(Ratepayer Funds)
Risk Exposure:
IF PosiGen's assets are worth ≤ $600M:
Brookfield = $600M recovered
CGB = $0 recovered
This is not an accident. This is a structural design that ensures ratepayers absorb losses before Wall Street takes any hit.
In a subordinated position, CGB's $30 million only gets repaid AFTER Brookfield's $600 million is fully paid. If PosiGen's assets are worth less than $600M, ratepayers get ZERO. CGB effectively functioned as "first loss" capital—absorbing all downside risk to protect Brookfield's investment.
This is the opposite of CGB's mandate. Public funds should catalyze private investment, not subordinate taxpayer money to de-risk Wall Street.
CGB alleges that Brookfield deliberately engineered a default by PosiGen in order to seize control of the company's assets (the "Backleverage Entities")—effectively stripping value away from junior creditors like CGB.
According to CGB's complaint, Brookfield forced PosiGen to accept a "Bridge Loan" that further encumbered the company's assets—diluting CGB's security interest and transferring value from PosiGen to Brookfield entities.
CGB claims a Brookfield executive threatened that CGB would be "dead to Brookfield" if they did not waive their contractual rights to restrict additional debt on PosiGen's balance sheet.
CGB's lawsuit alleges that PosiGen did not naturally fail due to market conditions or business mismanagement. Instead, CGB claims that Brookfield engineered a technical default to accelerate the debt and seize the collateral—the portfolio of solar assets worth hundreds of millions of dollars. This distinction between organic failure and predatory financial maneuvering is critical for understanding the legal liability and moral accountability.
PosiGen owns solar assets worth (estimate) $650M. Brookfield holds $600M senior debt; CGB holds $30M junior debt. If sold normally, CGB would recover $30M after Brookfield gets $600M.
Brookfield forces Bridge Loan and declares covenant violations. Accelerates $600M debt obligation. PosiGen cannot pay—triggering foreclosure process.
Under first-lien rights, Brookfield takes control of the Backleverage Entities (solar portfolios). Assets are now valued at foreclosure sale prices, typically lower than market value—often right around $600M.
Assets are now controlled by Brookfield and valued near the $600M senior debt. CGB's second-lien position is worthless. Ratepayers lose $30 million. Brookfield is made whole; Wall Street wins; ratepayers lose.
The Key Insight: This Is Not Random Bad Luck
Because the assets are now under Brookfield's control and likely valued near or below the $600M senior debt amount, CGB's junior debt is effectively vaporized. This is not an unfortunate business failure—this is a predatory financial maneuver that transfers value from junior creditors (ratepayers) to senior creditors (Wall Street).
If CGB's allegations are true—that Brookfield manufactured the default rather than PosiGen naturally failing—then this is not merely a failed investment. It is a case of:
This transforms the PosiGen loss from a governance failure into a criminal investigation—with implications for CGB's fiduciary responsibility to ratepayers and potential personal liability for board members who approved the subordinated structure.
CGB accepted a junior/second-lien position behind Brookfield's $600 million senior debt. This means ratepayer funds were used to de-risk Brookfield's investment—public money protecting Wall Street.
Ben Healey spent 7 years at CGB designing financing structures. He then left to become PosiGen's CFO, then President—all while CGB continued expanding PosiGen's credit lines and agreeing to unfavorable subordination terms.
The transition of Ben Healey from regulator to regulated entity creates a distinct appearance of impropriety. The timeline suggests a causal link between insider knowledge and the unfavorable debt structure.
| Year | Event | Implication |
|---|---|---|
| 2012-2019 | Ben Healey directs Clean Energy Finance at CGB | Gains intimate knowledge of CGB risk tolerance, underwriting standards, and political constraints. |
| 2019 | Healey exits CGB to become CFO/President of PosiGen | "Revolving Door" turns; former regulator joins the regulated entity. |
| 2020-2024 | PosiGen negotiates debt facility with Brookfield | Healey allegedly uses insider knowledge to keep CGB in a junior position while negotiating favorable terms for Brookfield. |
| Oct 2025 | CGB files lawsuit (CT Green Bank v. PosiGen) | Alleges Brookfield "manufactured" a default to wipe out CGB's subordinated position. |
| Nov 2025 | Court denies injunction | Assets seized by Brookfield; Ratepayer funds likely lost ($30M). |
The Critical Question:
Did Healey use his 7 years of insider knowledge about CGB's decision-making processes, risk tolerance, and political pressures to structure a deal that benefited PosiGen and Brookfield at the expense of his former employer and Connecticut ratepayers?
When Brookfield invested $600M, it validated that private capital was available. CGB should have exited per its statutory mandate to "crowd in" private capital. Instead, it stayed subordinated.
Responsibilities:
CGB authorizes initial credit line to PosiGen for residential solar financing targeting low-to-moderate income (LMI) households. Positioned as "mission-aligned" investment serving underserved markets.
Initial Amount: Millions in credit authorization (exact amount redacted in public minutes)
Justification: Fill market gap for LMI solar financing
Structure: Warehouse credit line for PosiGen's solar leases
Connecticut Green Bank
Director of Clean Energy Finance
Approving/designing PosiGen financing
PosiGen
Chief Financial Officer (CFO)
Receiving CGB financing
Before leaving: Healey participated in structuring the PosiGen relationship while at CGB
After leaving: Healey benefits from that same relationship as PosiGen executive
Ongoing: His former CGB colleagues continue approving PosiGen credit expansions
"I'm excited to join PosiGen...to expand access to clean energy for families who have been traditionally underserved."
— Ben Healey, PosiGen Press Release, 2019No disclosure that he came directly from the entity providing PosiGen's financing. No acknowledgment of potential conflict.
Despite Healey's departure creating obvious conflict, CGB Board continues approving modifications, extensions, and expansions to PosiGen's credit facilities.
| Date | Action | Healey's Role at PosiGen |
|---|---|---|
| Dec 2019 | Credit facility renewal | CFO (6 months in role) |
| 2020 | Facility modification | CFO |
| 2021-2022 | Extensions approved | Chief Commercial Officer |
No evidence that CGB Board:
Result: Business as usual, despite obvious appearance of corruption
PosiGen secures massive credit facility from Brookfield Asset Management, one of the world's largest alternative asset managers ($1 trillion+ AUM).
When a sophisticated $1 trillion institutional investor deploys $600 million, it means:
CGB's statutory mandate is to "crowd in" private capital. When Brookfield deployed $600M, the crowding-in was complete. CGB should have:
Result: Ratepayer funds protected, mission fulfilled, no loss risk
Instead of exiting, CGB makes the catastrophic decision to STAY IN as a junior/subordinated lender.
If assets remain after Brookfield paid...
Scenario: PosiGen Goes Bankrupt
| PosiGen Assets (Book Value): | $700 million |
| Distress Sale Value (40% recovery): | $280 million |
| Brookfield Claims: | $600 million |
| Shortfall: | -$320 million |
| CGB Recovers: | $0 |
Conclusion: CGB used ratepayer money to subsidize Brookfield's risk. This is not "crowding in" private capital—it's protecting private equity at public expense.
Position in 2024: President of PosiGen (promoted from CCO)
Healey, the former CGB executive who designed these financing structures, is now President of the company receiving this subordinated public financing from his former colleagues.
PosiGen subsidiaries default on required interest payments to the "Backleverage Entities" controlled by Brookfield.
Trigger Event: Missed debt service payments
Brookfield's Response: Exercise control rights as senior lender
CGB's Position: Powerless to intervene (junior lender has no say)
As senior secured lender, Brookfield:
CGB watches helplessly as private equity firm executes standard distressed playbook. Ratepayer funds have zero protection.
Case: Connecticut Green Bank v. PosiGen PBC, Case No. 3:25-cv-01841, U.S. District Court, District of Connecticut
"Without court intervention, CGB's position will be 'wiped out' and left 'dead' to Brookfield."
— CGB Complaint, Oct 30, 2025CGB's own lawyers admit in federal court that ratepayer funds are about to be obliterated. This admission comes months AFTER they accepted the subordinated position.
U.S. District Court Judge denies CGB's request for preliminary injunction.
"You voluntarily agreed to be a subordinated creditor. You cannot ask the court to rescue you from your own bad decisions when the consequences arrive."
Legal Reality: Junior creditors have almost no rights. CGB signed contracts agreeing to this. Courts won't rewrite deals to save parties from their own negligence.
PosiGen PBC files for bankruptcy protection. CGB's subordinated debt is effectively unsecured.
Outstanding CGB Debt at Bankruptcy: ~$2 million principal (after Jan 2025 repayment)
Total CGB Exposure (all time): ~$30 million
Expected Recovery: $0 - $0.10 on the dollar (0-10%)
ESTIMATED TOTAL LOSS:
$30,000,000 of ratepayer funds
In January 2025, PosiGen repaid ~$12 million to CGB following Brookfield facility upsizing. CGB defenders claim this shows "prudent risk management."
Payments made within 90 days of bankruptcy (or 1 year for "insiders") can be clawed back by bankruptcy trustee if:
Given Ben Healey's CGB→PosiGen career path and ongoing governance connections (Bert Hunter on both CGB and IPC boards, IPC's PosiGen relationship), bankruptcy trustee could argue CGB is an "insider" qualifying for 1-year look-back.
Result: CGB may be forced to return the $12M, increasing total loss to $42 million+
Director of Clean Energy Finance
Early 2019
LEAVES PUBLIC SERVICE → JOINS PRIVATE BENEFICIARY
Unanswered Questions:
CFO → CCO → President
PosiGen Press Release, 2019
"I'm excited to join PosiGen in their mission to expand access to clean energy for families who have been traditionally underserved..."
What He Didn't Say:
Authority Magazine Interview, 2023
"The future is green...PosiGen is leading the way in making solar accessible to all income levels..."
— Ben Healey, "The Future Is Green" interviewStill No Disclosure: Years later, still no acknowledgment of the revolving door or potential conflicts arising from his CGB tenure.
Q: When did PosiGen approach Healey about employment?
If negotiations began while he was still at CGB and involved in PosiGen matters, that's a clear conflict of interest.
Q: Did Healey properly recuse himself from PosiGen decisions before leaving?
No public record of recusal. CGB Board minutes from late 2018/early 2019 are heavily redacted.
Q: Did Healey use CGB insider knowledge to structure PosiGen deals?
He knew exactly what CGB would accept, what risk tolerance was, who to influence. This gave PosiGen unfair advantage over competitors.
Q: Did PosiGen's ability to secure favorable terms depend on Healey's connections?
Other LMI solar installers did not get same access or terms from CGB. Why was PosiGen special?
Q: Did CGB extend extraordinary leniency to PosiGen because of Healey?
Even as PosiGen showed signs of distress (2024-2025), CGB continued supporting it. Was this because of personal loyalty to former colleague?
Q: Would CGB have accepted subordinated position behind Brookfield for any other company?
This decision was financially irrational. Did personal relationships cloud judgment?
Current CT Law: No statutory cooling-off period for quasi-public agency executives joining companies they regulated/financed.
What's Needed: Mandatory 2-year prohibition on joining entities that received financing from CGB within prior 5 years.
Acceptable as market gap
Creates conflict, no cooling-off period
No enhanced scrutiny or independence
CGB should EXIT but doesn't
Ratepayer funds as first-loss capital
Predictable outcome of subordination
Total fiduciary failure
Fill genuine market gap ✓
Immediate recusal from all PosiGen matters; 2-year cooling-off period enforcement
Third-party valuation to ensure no favoritism
EXIT IMMEDIATELY - Mission accomplished, private capital engaged
Demand pari passu (equal) status with Brookfield, never subordinate
REFUSE to participate - don't accept subordination
$30M deployed to actual market gaps (storage, deep retrofits, etc.)
Proposed Statute:
"No person who has served as an officer, director, or senior executive of the Connecticut Green Bank shall, for a period of two (2) years following termination of service, serve as an officer, director, employee, or consultant of any entity that has received financing, grants, or other financial assistance from CGB within the preceding five (5) years."
Penalty for Violation: Forfeiture of CGB retirement benefits + civil fines
Proposed Statute:
"CGB shall be prohibited from holding subordinate debt or equity positions in any transaction where a private institutional lender holds a senior position exceeding ten times (10x) the Green Bank's investment amount."
Rationale: If Brookfield has $600M and CGB has $30M (20:1 ratio), CGB is clearly being used as first-loss capital to de-risk private equity.
Proposed Statute:
"When a CGB-supported entity secures senior private financing exceeding 10x CGB's investment, CGB must either: (a) exit the transaction within 12 months, OR (b) convert its position to pari passu (equal priority) status with the private lender."
Effect: Forces CGB to declare victory and exit when private capital validates the market, fulfilling the "crowd in" mandate.
Proposed Statute:
"Any CGB financing or contract modification involving an entity where current or former CGB officials (within 5 years) hold executive positions must be:
The PosiGen disaster is not a "market risk" story. It's a story of reckless governance, revolving door corruption, and fiduciary betrayal. Ratepayer funds were gambled away to subsidize private equity, with no oversight, no exit strategy, and no accountability.
This must never happen again. The reforms above are not optional—they are essential to protect Connecticut ratepayers from future Green Bank catastrophes.