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The Swedish battery developer and manufacturer, Northvolt, has filed for bankruptcy in the US, as the company struggles with mounting debt, after it was unable to secure rescue funding and was left with only one week of cash reserves.
ADVERTISEMENTSwedish battery cell maker Northvolt AB, which produces battery cells for electric vehicles (EVs), has announced that it has filed for Chapter 11 bankruptcy in the US.
This is being seen as a significant hit to the European domestic electric vehicle industry, as the company was the most developed battery manufacturer on the continent.
Northvolt AB produces lithium-ion, lithium-metal and sodium-ion cells for e-mobility and energy storage, amongst other purposes. The company’s flagship battery gigafactory, Northvolt Ett, is located in Skellefteå, Sweden.
The move comes as the battery maker struggled to secure rescue funding, resulting in the company having only one week’s worth of cash remaining, which came up to about $30m (€28.81m). In contrast, Northvolt AB’s debt amounted to around $5.84bn (€5.61bn).
Filing for bankruptcy will give the company access to about $245m (€234.34m) worth of new financing, as it is a voluntary reorganisation.
These new funds will be divided into two parts. The first part is about $100m (€95.79m) of debtor-in-processing financing, which is a special type of funding available for businesses choosing to restructure through Chapter 11.
The second part is approximately $145m (€138.89m) of cash collateral, which a current client of Northvolt is providing.
The move will also let the company scale its operations as needed to best meet current market demands, as well as form a robust foundation for long-term operations. In the long run, this decision is expected to help Northvolt build a domestic battery production base.
The company has said that it will keep operating as normal while the reorganisation takes place. This includes employee wage payments as usual, along with obligations to key vendors, as well as customer deliveries.
Northvolt Labs, located in Västerås, Sweden, as well Northvolt Ett will keep functioning as normal, along with Northvolt AB’s subsidiaries, Northvolt North America and Northvolt Germany.
Northvolt’s CEO, Peter Carlsson, announced that he would be stepping down, following the bankruptcy filing.
Bankruptcy filing expected to help Northvolt build European industrial base
Tom Johnstone, the interim chairman of the Board, said in a statement on the company’s website: “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production. Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification.”
He added: “Throughout this process, we will focus on meeting our commitments to our stakeholders, including our employees, customers, suppliers and the governments of the countries in which we operate.
“As a reorganised entity, we aim to establish a resilient base of operations and a competitive platform for innovation and long-term growth that will advance our work to build a more sustainable society.”
