The German company Lilium produces flying electric passenger drones.
Lily
Share from Lily tanked on Friday after the online taxi firm said in a filing that two major additions will file for insolvency in the coming days.
Shares of the German aerospace startup fell more than 60% after the news, before slightly losing ground. The stock is up 53% since 11:39 ET.
In a US regulatory filing, Lilium – which is listed on Nasdaq – said it was unable to raise sufficient additional funds to continue operations of Lilium GmbH and Lilium eAircraft GmbH, the company’s two main subsidiaries.
As a result, the head of the subsidiary “determined that it was deeply in debt … and would not be able to pay the debt that was due … in the next few days,” Lilium said.
“The Management of the Subsidiary has informed the Company that it will have to file for insolvency under German law and will thus implement a self-administration process in Germany,” it added.
Lilium has tried and failed to persuade the federal government in Germany to provide state support. Lilium sought to raise a 50 million euro ($54 million) loan from the state treasury, but its request was rejected by lawmakers.
In general, Lilium is trying to raise a convertible loan of 100 million euros. The proposed state aid will be issued by KfW, Germany’s state development bank.
After being rejected by the federal government, Lilium continued separate talks with the state of Bavaria in southeastern Germany. It seeks to raise at least 50 million euros from the Bavarian state.
However, on Thursday, Lilium said it had “not reached an agreement in principle” with Bavaria.
After filing for insolvency, subsidiaries generally do not have to pay their pre-filing debts, Lilium said, adding that creditors will typically be “prohibited from seizing the company on any existing claims.”
The subsidiary’s planned insolvency filing could result in Lilium’s eventual delisting from the Nasdaq Global Select Market, or suspension of its shares.
This is the latest news and will be updated shortly.