European EV battery maker Northvolt files for bankruptcy

Investing.com -- Stockholm-based battery manufacturer Northvolt on Thursday said it has filed for Chapter 11 bankruptcy protection in the United States, a move aimed at restructuring its debt and securing financial stability. 

Despite the bankruptcy filing, the company said that operations across its facilities, including its flagship gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, will continue without interruption. 

The Chapter 11 process, filed in the U.S. Bankruptcy Court for the Southern District of Texas, allows Northvolt to reorganize its finances and access about $245 million in new funding. 

This includes about $145 million in cash collateral and $100 million in debtor-in-possession (DIP) financing provided by one of its existing customers. 

The company plans to use the funds to meet obligations to employees, suppliers, and customers while maintaining production levels and fulfilling commitments to its stakeholders. 

The voluntary reorganization follows a strategic review aimed at adjusting Northvolt’s business to meet current customer needs while maintaining its long-term goal of building a robust, homegrown industrial base for battery production in Europe. 

Tom Johnstone, the interim Chairman of the Board, in a statement said that this decision was essential to confront immediate issues and prepare the company for long-term growth.

“This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” Johnstone said. 

“Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification.” 

Northvolt’s operations in Germany and Canada remain unaffected by the Chapter 11 filing, as these subsidiaries are financed separately. The company noted that these projects are integral to its strategic goals and will continue as planned. 

The reorganization is expected to conclude by the first quarter of 2025. The company’s flagship facility, Northvolt Ett, is a cornerstone of Europe’s efforts to establish a local supply chain for electric vehicle batteries, reducing reliance on imports from Asia. 

Northvolt’s legal advisors for the proceedings include Kirkland & Ellis LLP, A&O Shearman, and Mannheimer Swartling Advokatbyrå AB, while Rothschild & Co is overseeing the search for new investments.  

Source: Investing.com