Swedish battery maker Northvolt has voluntarily filed for Chapter 11 bankruptcy in the United States.
The Chapter 11 restructuring process in the US will allow Northvolt to access new sources of funding, including approximately $145m in cash collateral.
Northvolt pledged to continue operating as usual during the reorganisation. The company will continue making deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees.
In addition, one of Northvolt’s existing customers has committed to provide $100m in new financing to support Northvolt’s business operations in the form of debtor-in-possession (DIP) financing.
This is a specialised type of financing for businesses that are restructuring through a Chapter 11 process.
Northvolt Ett, the company’s flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden will remain operational as Northvolt ramps up production to meet commitments to its customers.
Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.
Interim chairman of the board Tom Johnstone said: “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. We are likewise pleased by the strong support we have received from our existing lenders and our customers.”
As part of the restructuring process, which is anticipated to be completed in the first quarter of 2025, Northvolt will evaluate proposals for new money investment.
This process will include engagements with both strategic and financial investors, as well as existing lenders, shareholders and customers.
Johnstone continued: “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.”