Northvolt files for Chapter 11

February 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

February 2025 Issue

In a major setback to Europe’s electrification ambitions, Swedish battery cell maker for electric vehicles Northvolt, along with a number of its subsidiaries, has voluntarily filed for Chapter 11 reorganisation in the US.

The Chapter 11 filings will help Northvolt restructure its debt, appropriately scale the business to current customer needs and secure a sustainable foundation for continued operation. The company has also stated that it may take legal actions in other jurisdictions to facilitate the US Chapter 11 proceedings, which include entities in the US, Sweden and Poland.

Similar to other international companies that have used the Chapter 11 process to reorganise their financial obligations, Northvolt will continue to operate as usual during the restructuring – continuing to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees.

Moreover, the Chapter 11 process will allow Northvolt to access new sources of funding, including approximately $145m in cash collateral. In addition, one of Northvolt’s existing customers has committed to provide $100m in new financing to support Northvolt’s business operations in the form of debtor in possession (DIP) financing.

Northvolt Ett, the company’s flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden, will remain operational as Northvolt ramps up production to meet commitments to its customers. Northvolt Germany and Northvolt North America, subsidiaries of Northvolt with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.

“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 the board at Northvolt. “Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification. We are likewise pleased by the strong support we have received from our existing lenders and our customers.”

As part of the restructuring process, which is anticipated to be completed in the first quarter of 2025, Northvolt will evaluate proposals for new money investment. This process will include engagements with both strategic and financial investors, as well as existing lenders, shareholders and customers.

Northvolt’s restructuring and communications adviser throughout the restructuring process is Teneo, with Kirkland & Ellis LLP, A&O Shearman and Mannheimer Swartling Advokatbyrå serving as legal counsel. Northvolt has also engaged Rothschild & Co to oversee its marketing process.

Established in 2016 in Stockholm, Sweden, Northvolt pioneered a sustainable model for battery manufacturing and has received orders from several leading automotive companies. The company is currently delivering batteries from its first gigafactory, Northvolt Ett, and from its R&D and industrialisation campus, Northvolt Labs.

“Throughout the restructuring process, we will focus on meeting our commitments to our stakeholders, including our employees, customers, suppliers and the governments of the countries in which we operate,” concluded Mr Johnstone. “As a reorganised entity, we aim to establish a resilient base of operations and a competitive platform for innovation and long-term growth that will advance our work to build a more sustainable society.”

Fraser Tennant