Local time on Wednesday (March 12), Europe’s largest battery company, the Swedish power battery company Northvolt announced on its official website that it has filed for bankruptcy in Sweden because the company is running out of cash.
The Swedish company has filed for bankruptcy protection in the United States in November last year, the company had hoped to complete the reorganisation in the first quarter of this year, in order to obtain funds to be able to continue operations.
Northvolt said on Wednesday that despite pursuing all available options to negotiate and implement a financial restructuring, including Chapter 11 reorganisation proceedings in the US; and despite liquidity support from lenders and major counterparties, the company is unable to obtain the necessary financial conditions to continue operations in its current form.
As of 31 January, the total debt of Northvolt’s nine affiliates in the insolvency proceedings had surpassed the $8 billion mark, according to newly disclosed documents.
This is one of the largest bankruptcies in Swedish corporate history, and the most high-profile since Saab’s bankruptcy more than a decade ago.
According to interface news, as Europe’s ‘battery brother’, was founded in 2016, Northvolt had high hopes, its investors including BlackRock, Goldman Sachs, Volkswagen Group and other well-known institutions and automakers, the cumulative amount of financing more than ten billion U.S. dollars. Among them, in 2019 and 2021, Volkswagen Group invested about 1.4 billion euros in Northvolt.
Northvolt is not only favoured by capital, but also once held huge orders from many multinational automakers. northvolt had revealed that the company needed to expand its production scale in order to deliver a total of $55 billion in orders from major customers such as BMW, Volvo, and Volkswagen Group.
However, BMW cancelled a $2 billion (Rs 14.1 billion) contract with Northvolt to purchase battery cells because the products could not be delivered on time, and instead gave the order to South Korean battery maker Samsung SDI.
Since then Northvolt’s business situation began to take a sharp turn for the worse, and the company plans to take measures such as laying off employees, suspending and selling part of its business, and delaying the construction of production capacity to cope with the challenge.
On 23 September last year, Northvolt officially announced large-scale layoffs, planning to lay off 1,600 employees at its Swedish base, accounting for about one-fifth of the company’s global workforce.
On 21 November, Northvolt filed for Chapter 11 bankruptcy protection in the US and will seek reorganisation under Chapter 11 of the bankruptcy code. The company said in its filing that it has about $30 million in available cash and carries $5.84 billion in debt.Northvolt said it only has enough cash on hand to maintain operations for about a week and said that $100 million in new financing will be available from existing customers to support the company’s business operations during the bankruptcy. During the bankruptcy, Northvolt would still deliver products to customers and make payments to key suppliers.
Immediately following the next day, Northvolt co-founder and CEO Peter Carlsson resigned, saying the company would need to raise $1 billion to $1.2 billion to resume operations.
Source: Caixin News Agency, Interface News
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