Battery manufacturer Northvolt is days away from filing for bankruptcy protection in the United States, so-called chapter 11, or bankruptcy, according to Financial Times sources. Archive image
The next few days will be crucial for Northvolt's future, as the company negotiates with lenders and owners for financial support. According to the Financial Times, Northvolt's management is considering filing for chapter 11 bankruptcy protection in the US, a process that allows for corporate restructuring. By filing for chapter 11, a company can continue operating while it reorganizes its finances under court supervision.
Sources for Dagens Industri also confirm that Northvolt's board is considering this option, similar to the recent chapter 11 filing by SAS.
A chapter 11 filing would allow Northvolt's management to retain control of the company, unlike a Swedish bankruptcy where a trustee takes over. It would also enable the company to borrow new funds and secure "debtor-in-possession" (DIP) financing.
The company would then have four months to develop a restructuring plan, with the possibility of an extension. According to information provided to DI, this is currently Northvolt's primary strategy, though the company itself has declined to comment on the matter.
Meanwhile, Reuters reports that Northvolt has failed to meet its internal production targets for the Skellefteå battery factory since September, including the goal of producing 100,000 battery cells per week by the end of 2024. Northvolt has now reportedly described these targets as outdated.
– There's a strong need for an independent European battery manufacturer, says Hampus Engellau, an automotive analyst at Handelsbanken, in an interview with TT.
However, for Swedish Northvolt to fill that role, it urgently requires a significant rescue package and an additional capital injection of around 15 billion kronor. This comes on top of the approximately 150 billion kronor already invested in the company. With major shareholders like Volkswagen, Goldman Sachs, and Vargas hesitant to invest further, this scenario seems challenging, according to Engellau.
It has been a bad autumn for Northvolt.
Government support from Germany and/or Sweden seems unlikely, even though it might be politically feasible, according to Engellau.
He questions whether the state should take ownership and risk losing tax revenue, or if it should provide capital and guarantees to save the company as a private entity, with profits going to private interests.
This autumn, Northvolt, which recently faced a payment order of over half a billion kronor from Kronofogden, has scaled back several large projects, laid off 20% of its workforce, and filed for bankruptcy for its subsidiary Northvolt Expansion, responsible for expanding the Skellefteå battery factory.
Last week, Northvolt sold a factory facility in San Leandro, California, and is currently negotiating with Volvo Cars regarding the future of the Novo Energy factory building in Gothenburg, after Volvo Cars accused Northvolt of breach of contract.
Additionally, Sven Fuhrmann, Volkswagen's representative on Northvolt's board, recently resigned.
Matti Kataja, coomunications manager at Northvolt.
– We expect Volkswagen to propose a new board member, and we are in discussions with them about this, wrote Northvolt's communications manager Matti Kataja in an email to Norran.