Swedish battery maker Northvolt filed for Chapter 11 bankruptcy protection in the U.S., delivering a blow to Europe’s electrification ambitions.
Once one of Europe’s most valuable privately held tech firms, the company on Thursday said the voluntary bankruptcy move will allow it to restructure its debt, scale back its business and secure a sustainable foundation for its continued operation.
The firm noted it would continue functioning as normal during the restructuring process, which is expected to finalize in the first quarter of next year.
“This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” said Tom Johnstone, interim chairman of Northvolt’s board.
“Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification,” he added.
Northvolt said the reorganization would help it access approximately $245 million in new financing, totaling around $145 million in cash and $100 million debtor-in-possession financing — a type of loan that is provided to companies in financial distress.
Northvolt Ett, the company’s flagship battery gigafactory in Skellefteå in north Sweden, will remain operational, the business said.
It added that the restructuring process will ultimately help Northvolt’s long-term mission to create a Western industrial base for battery production.
Cost-cutting drive
A partner of major European automakers, Northvolt produces lithium-ion batteries for the blooming electric vehicle industry, which has recently been rocked by intensifying competition from the likes of China.
The Stockholm-based business has long been regarded as Europe’s best hope of building a homegrown EV battery champion. More recently, however, the company has been struggling to stay afloat while navigating a major cost-cutting drive.
In September, Northvolt announced plans to reduce its global workforce by around 20% and its Swedish personnel by 25%.