Shares in eVTOL developer Lilium N.V. have crashed on the Nasdaq exchange following the company’s filing with the Securities & Exchange Commission (SEC) that following a failure to raise sufficient funds, its subsidiaries Lilium GmbH and Lilium eAircraft GmbH “determined that they are overindebted … and are or will become unable to pay their existing liabilities due … within the next few days, and therefore would be filing for insolvency in accordance with German Law.”
Critically, the company also said, “The management of Lilium N.V. is continuously reviewing whether there are grounds for its own insolvency as well, and the result of any such review may be that Lilium N.V. files for regular insolvency proceedings.”
It should be noted that in German law, self-declared insolvency is in some way akin to Chapter 11 of the US bankruptcy code in that it affords some protection from creditors while further finance or a buyer is found. However, it is not intended to be used as a restructuring tool; rather, it is more terminal than its US counterpart.
Prompting the question of why a potential investor would be interested in a purchase when waiting for full bankruptcy would allow assets to be acquired at a greater discount.
In trading, news of the filing resulted in a 61% fall in the share price, with the company’s shares trading at US$0.21 at the close. They fell a further two cents in after-hours trading. Many commentators believe that this will make a delisting inevitable.