Suntech (NYSE: STP, $1.19 per share, down 1.6 percent) was the world's number-one solar manufacturer in 2010 and rode a subsidy-led boom to the top. Its suddenly super wealthy founder and CEO, Dr. Zhengrong Shi, was hailed as an entrepreneurial beacon in China's manufacturing sector.

Shi, despite owning almost 30 percent of the company's shares, is now fighting to remain on the Chinese company's board.

In July of last year, Suntech revealed that a business partner, Global Solar Fund (GSF), faked $680 million in collateral for a loan backed by Suntech. In August, amidst a difficult debt situation and allegations of financial impropriety, Dr. Shi stepped down as CEO and was replaced by David King, who had served as CFO of the firm. The once highly valued PV firm (its shares peaked at $90 in 2008) now has a market cap of $219 million. Shi still served as Executive Chairman and Chief Strategy Officer.

This week, the Suntech Board of Directors suddenly removed Dr. Shi as Chairman -- just prior to a $541 million bond payment. Shi says that he "was improperly removed as chairman and that he was committed to staying," according to reporting from Reuters. In a statement, Shi called the move "misconceived and unlawful."

Suntech named Susan Wang as Shi's replacement. Shi remains as chief strategy officer and a director. According to Reuters, the board said it is "confident" that Ms. Wang's appointment to replace Mr. Shi "is valid and effective under the law of the Cayman Islands, the country of the Company's incorporation."

The big question is whether the Chinese government sees Suntech as too big to fail and steps in to save the once-lauded firm -- or whether the Chinese government is willing to let the overcapacity Chinese solar manufacturing base consolidate and reach some balance with demand.

Suntech spokespeople in the U.S. have not yet responded to GTM's inquiries. Reuters noted that the pricing of Suntech's convertible bonds indicated some optimism for a bailout. 

GTM Research's Senior Solar Analyst Shyam Mehta comments, "Clearly, there is a power struggle going on between Dr. Shi and the rest of the board, much of it doubtless fallout from the Global Solar Fund scandal, as well as the heavy financial losses suffered by Suntech in recent quarters under Dr. Shi's leadership. The GSF scandal becomes all the more significant given that Suntech had originally planned to pay off the bonds by selling GSF-invested projects. This has been put on hold following the discovery that the $690 million in German bank bonds that had been provided to Suntech to guarantee loans taken out from the China Development Bank were fraudulent. It has been clear for some time now that Suntech will need significant infusion of capital to continue to exist as a company. Whether and how this materializes remains to be seen."

GTM Research's Global PV Competitive Intelligence Tracker does not count Suntech as a leading beneficiary of the booming domestic Chinese solar market.

Aaron Chew of the Maxim Group comments to GTM that Shi "put the entire firm’s capital -- and survival -- at risk by working with nefarious characters from southern Italy in an unwise attempt at quick riches." Chew added, "The company is essentially on its knees starving for capital, with $541 million due to bondholders next week and $700 million in collateral it must somehow come up with for the CDB, yet having burned through hundreds and hundreds of millions of dollars in cash over the last few years."

"It may be too late to save Suntech as it is, but if you ask me, it is definitely too late to expect Dr. Shi to be in a position or have the credibility to save it," concluded Chew.