SunEdison’s failure to meet its obligations was seen as the main reason for the termination. Vivint Solar said it reserves all rights under the merger agreement.
The company sued SunEdison over its willful breach of the merger agreement. It is seeking damages for the benefits its stockholders expected in connection with the transaction.
Vivint Solar president and CEO Gregory Butterfield said: "SunEdison has willfully breached its obligations under the merger agreement and we intend to pursue Vivint Solar’s remedies vigorously."
SunEdison agreed to acquire Vivint Solar in July 2015 in a bid to speed up its expansion in the residential solar market.
Vivint Solar operates in seven states including California, Hawaii, Maryland, Massachusetts, New Jersey, New York, and Washington D.C.
The company provides distributed solar energy to residential, commercial and industrial customers across the US.
Reuters reported that like other solar firms, SunEdison has been affected by the decline in oil prices and it has also been criticized for making acquisitions that are not affordable to it.
The company, which has a market value of around $600m, had long-term debt of $9.77bn as of 30 September 2015.
SunEdison has delayed filing its annual report due to an internal investigation into its financial matters.
SunEdison has increased its 2016 annual guidance for installations by 50% to between 4.2GW and 4.5GW.
