Germany’s Lilium files for insolvency

January 2025 | DEALFRONT | BANKRPUTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

January 2025 Issue

In late October, Lilium N.V., a leading electric aircraft manufacturer and pioneer in regional air mobility, announced that its principal German subsidiaries were to apply for self-administration proceedings with the competent court in Germany. This filing follows a lengthy and complex government approval process for a loan from the German state-owned investment and development bank KfW, which failed in the Budget Committee of the German parliament.

In a statement announcing the filing, Lilium noted that its international competition had received grants and loans in the US, France, China, Brazil and the UK, and thus the company’s investors believed that German government support was critical to retaining market confidence and attracting potential future investment. However, German government support of the KfW loan was a closing condition to already committed private funding and without this support the company felt it had no alternative but for its principal German subsidiaries to file for self-administration.

The self-administration process is designed to preserve and continue the business that is the subject of the proceedings and is often used to initiate investment by new parties or a process to sell the company’s assets or business as a whole.

Lilium was also in advanced discussions regarding a French government guarantee of a €219m loan to finance a battery factory and an assembly line in the southwest of France.

Following the Lilium Jet’s planned first flight in early 2025, Lilium anticipated receiving pre-delivery payments and new investment to finance the company into 2026 when the company expected delivery would begin on its current order pipeline consisting of firm orders, reservations, options and memoranda of understanding for more than 780 Lilium Jets to operators in the US, South America, Europe, Asia and the Middle East.

“Our plan was to obtain shareholder investment in a new funding round anchored by a German government backed loan of €100 million,” said Klaus Roewe, chief executive of Lilium. “We had already conditionally secured additional private capital to complement the KfW loan. However, the Budget Committee was unable to agree on the loan and Bavaria couldn’t do it alone.

“We deeply regret the insolvency and its consequences for all stakeholders at such a crucial stage of our company’s development. However, while there is no guarantee for success in insolvency proceedings, we hope that the Lilium Jet will get a chance for a fresh start after the self-administration process is completed. We strongly believe that electric flying is our best hope for the decarbonization of aviation,” he added.

In the days following Lilium’s filing, the Weilheim Local Court authorised the company’s restructuring under self-administration at Lilium GmbH and Lilium eAircraft GmbH, the company’s two principal German operating units. The self-administration is expected to last around six to eight weeks, with Germany’s social security system guaranteeing staff wages for a maximum of three months. Dutch-registered parent company Lilium NV will also file for insolvency, the company noted.

Lilium has retained over 1000 employees at two sites in Germany and continues to progress the final assembly of two Lilium Jets, ahead of a planned maiden flight in the first quarter of 2025.

The court appointed two lawyers with restructuring experience, Gerrit Hölzle and Thorsten Bieg, as chief insolvency officers to the management boards of the German subsidiaries with immediate effect. The court also appointed lawyer Ivo-Meinert Willrodt, managing partner of Pluta Rechtsanwalts GmbH, as provisional administrator.

“With the support of our appointed trustee and restructuring experts, we at Lilium remain fully focused on re-emerging from restructuring with new investment to support the journey of the all-electric Lilium Jet through to certification and commissioning,” said Mr Roewe.

Following the court’s approval Lilium called in KPMG to begin the process of finding buyers or investors for the company. While Lilium hopes a buyer can be found for the entire business, it is possible that only parts of the operation will prove attractive.

Richard Summerfield