The German company Lilium produces electric passenger drones.
Lilium
shares Lilium It stumbled on Thursday after the air taxi company said in a filing that its two main companies would file for bankruptcy in the coming days.
Shares of the German aviation startup fell more than 60% on the news, then pared losses slightly midday, returning closer to their opening low. The stock is down nearly 60% as of 3 p.m. ET.
In a US regulatory filing, Lilium – which is listed on the Nasdaq stock exchange – said it was unable to raise enough additional funds to continue operations of Lilium GmbH and Lilium eAircraft GmbH, the company's two main subsidiaries.
As a result, the heads of these subsidiaries “determined that they are overindebted… and that they are unable or will become unable to pay their current outstanding obligations… within the next few days,” Lilium said.
He added: “The management of the subsidiaries informed the company that it must submit an application for insolvency under German law, and thus it will apply for self-administration procedures in Germany.”
Lilium tried and failed to persuade Germany's federal government to provide it with state support. Lilium was seeking to raise loans worth 50 million euros ($54 million) from state coffers, but its request was rejected by lawmakers.
In total, Lilium was trying to secure a convertible loan worth €100 million. The proposed government aid was supposed to be issued by the state-owned German development bank KfW.
After being rejected by the federal government, Lilium continued separate talks with the state of Bavaria in southeastern Germany. It was seeking to collect at least 50 million euros from the state of Bavaria.
But Lilium said on Thursday that it had “not reached an agreement in principle” with Bavaria.
Once an insolvency filing is filed, subsidiaries generally will not have to repay any pre-filing debts, Lilium said, adding that creditors typically “will be precluded from foreclosing against the companies on any claims they may have.”
Planned insolvency filings by subsidiaries could result in Lilium eventually being delisted from the Nasdaq Global Select Market, or having its shares suspended.
