NEW YORK, NY – Northvolt AB, a Swedish electric vehicle supplier, recently filed for bankruptcy protection in the United States due to a shortfall in rescue funding. As a last-ditch effort to save the struggling battery maker, the company made the decision to restructure under Chapter 11 of the bankruptcy code.
Facing severe financial challenges, Northvolt revealed that it only had approximately $30 million in available cash and a staggering $5.84 billion in debt. Despite efforts to secure additional financing, the company found itself in a precarious position, prompting the move to seek bankruptcy protection in the US.
The decision to file for Chapter 11 bankruptcy comes after months of discussions with stakeholders, including owners, customers, and creditors, in an attempt to find a path forward for the company. In a bid to address the cash shortage, Northvolt had previously implemented cost-cutting measures, such as reducing its workforce by a quarter and halting expansion plans.
Despite the bankruptcy filing, Northvolt Ett, the company’s flagship factory located near the Arctic Circle in Sweden, will continue operations as usual during the reorganization process. The company assured customers that deliveries will not be impacted, critical vendors will be paid, and employees will continue to receive their wages.
Throughout the restructuring process, Northvolt will have access to approximately $145 million in cash collateral. Scania CV AB, a truck-making unit of Volkswagen AG and a significant Northvolt customer, has also pledged $100 million in debtor-in-possession financing to support the company during Chapter 11 proceedings.
As Northvolt navigates the bankruptcy process, it is hoped that the reorganization will allow the company to find a long-term solution to its financial challenges. Despite the difficulties it faces, Northvolt remains committed to its goal of partnering with strategic or financial investors to secure its future in the competitive electric vehicle market.