Lilium woes show no sign of abating as insolvency looms
October 24, 2024
German air taxi startup Lilium saw its shares plummet on Thursday as two of its main subsidiaries look to file for insolvency.
Despite Lilium’s chief commercial officer Sebastian Borel expressing optimism during this year’s NBAA-BACE about the company’s’ future amid a deepening cash crisis, shares in the company fell more than 60% on Thursday. This sharp decline followed the air taxi firm’s announcement in a US regulatory filing that its two main subsidiaries are to file for insolvency in the coming days.
While the stock rebounded slightly after the initial plunge, the announcement underscored Lilium’s challenges in securing additional funding to sustain operations of its two main subsidiaries: Lilium GmbH and Lilium eAircraft GmbH.
The filing stated that the management of the subsidiaries “determined that they overindebted… and are or will become unable to pay their existing liabilities… within the next few days.” Subsequently, they have informed the company they “have to file for insolvency under German law and in doing so will apply for self-administration proceedings in Germany.”
Earlier this week, Lilium was unsuccessful in raising additional funds through a combined loan worth €100 million. The German federal government rejected a request to supply the company with €50 million in state support to match a similar guarantee already received by the state of Bavaria (although this guarantee was subsequently called into doubt as well).
Responding to the news, Iceberg Research, a financial analysis firm specialising in short selling, also released a report accusing Lilium of being “a fraud” and “adopting a bold PR strategy” that misrepresented its progress towards commercialisation.
While Lilium has previously suggested that a move within Europe could be on the cards, the filing for insolvency and application for self-administration in Germany could result in the company being delisted from the Nasdaq Global Select Market.
