Northvolt Files for Bankruptcy After Failed Rescue Attempts
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Northvolt AB filed for bankruptcy protection in the U.S. after failing to secure a lifeline for its battery-cell business in a faltering market for electric vehicles.
The Swedish company filed for Chapter 11 in the Southern District of Texas, it said in a statement on Nov. 21. The legal process provides the company with court protection from creditors, allowing operations to continue as it restructures its balance sheet.
Northvolt said its main factory will operate as usual during the reorganization. “The company will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees,” according to the statement.
Through the court process, Northvolt will have access to about $145 million in cash collateral, the company said. One of its customers will also provide $100 million in debtor-in-possession financing.
The move caps months of talks with owners, customers and creditors to find a way for Europe’s rare homegrown maker of EV batteries to continue operations. The company slashed jobs and nixed expansion plans in a bid to overcome a cash squeeze that intensified over the autumn, after it lost a key contract and was unable to access $1.5 billion in loan guarantees.
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In recent weeks, Northvolt engaged in intense negotiations involving lenders, shareholders and customers over a $300 million rescue proposal meant to tide the company over as it sought longer-term funding. When no deal materialized, the battery maker sought protection from creditors.
Northvolt opened its main plant in Skelleftea, near the Arctic Circle, in 2021, but was unable to meet targets for ramping up volumes amid intense competition with established Chinese and South Korean battery-cell manufacturers. In June, shareholder BMW AG canceled a $2 billion battery order over quality issues.
As demand slowed in the broader EV market, Northvolt soon launched a review of its sprawling growth plan. It decided to slash 20% of its global workforce, replaced the CEO of the flagship plant and bankrupted a unit dedicated to expansion there.
Volvo Car AB initiated proceedings last month to take over their joint venture, while Volkswagen AG’s representative to Northvolt’s board stepped down in November. The government of Sweden, meanwhile, repeatedly ruled out taking a stake to save its champion.
CEO Peter Carlsson said this month that the company needed more than $900 million to permanently secure its finances, and that the company was looking for partnerships, including in Asia.
Northvolt took in some $10 billion in debt and equity financing since its founding, including support from the European Investment Bank, Sweden’s Export Credit Corporation and the Nordic Investment Bank.
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