Shares of German eVTOL company Lilium (LILM, Financial) drastically fell by over 55% during US market trading. This decline follows Lilium's announcement that two of its key subsidiaries plan to file for bankruptcy. The company disclosed in a regulatory filing that it failed to secure enough funding to sustain the operations of Lilium GmbH and Lilium eAircraft GmbH.
The subsidiaries' management determined they are "over-indebted" and will not be able to meet their financial obligations, leading to an impending bankruptcy filing under German law. This filing will initiate a self-administration process, allowing the subsidiaries to remain in control of their operations during bankruptcy, rather than relinquishing control to an insolvency administrator.
As of the report, the subsidiaries have only limited cash reserves, jeopardizing their ongoing operations unless additional funds are obtained. Lilium previously sought financial support from the German federal government, aiming for a €50 million loan, but this request was rejected. The company had initially tried to raise a total of €100 million through convertible loans, which included state aid from the state-owned KfW Development Bank. However, this aid was also denied.
Following the government's rejection, Lilium shifted its focus to discussions with the state of Bavaria for at least €50 million in funding, given that Bavaria is Lilium's headquarters. Nevertheless, Lilium has yet to reach a preliminary agreement with the Bavarian state. The company indicated that post-bankruptcy filing, its subsidiaries may not need to repay any pre-filing debts, and creditors will generally be restricted from making claims against these companies.
It is important to note that the bankruptcy proceedings may lead to Lilium's delisting from the Nasdaq or possible stock suspension.
