Northvolt‘s finances have not been good for a long time. In the USA, Swedes are now protected from creditors: what does this mean in concrete terms for the construction of a factory near Heide?
Stockholm.
Financially struggling Swedish battery maker Northvolt has filed for bankruptcy protection in the United States. The company announced in the evening that it had initiated restructuring proceedings under Chapter 11 of the US bankruptcy law. In this way, Northvolt wants to protect itself from creditor claims while fighting for its future as an independent company.
This step provides access to new sources of financing, Northvolt said. $100 million would be provided to the company by a corporate client as part of some sort of bridge financing. Additionally, Northvolt will have access to approximately $145 million (so-called cash collateral) from lenders.
Northvolt has long been considered a great hope for the European automotive industry when it comes to the production of batteries for electric cars. The manufacturer’s largest shareholder is the German car manufacturer Volkswagen. Owners also include US investment bank Goldman Sachs and BMW.
Impact on the German project?
It is not yet clear what this will mean concretely for the construction of a Northvolt gigafactory in Heide, Schleswig-Holstein. In the evening the company explained: the German branch will be financed independently of the parent company. “It is not part of the Chapter 11 proceedings.”
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Northvolt has been struggling with its finances for a long time. (archive image) Image: Britta Pedersen/dpa
President of Germany Christofer Haux said: “The construction work in Dithmarschen is making further progress. The location has the highest priority.” But it is already clear that the factory will start operating later than initially planned. Cell assembly is not expected to begin until the second half of 2027 instead of late 2026.
Earlier this year the EU Commission approved €902 million in financing and guarantees for the billion-dollar project in Heide. The federal government and the state of Schleswig-Holstein are supporting the construction of the battery factory with around 700 million euros. Guarantees for a further 202 million euros are also possible.
An administrative agreement provides that state funds of 137 million euros will initially flow. But so far this has not been the case. The federal government contributes approximately 564 million.
Northvolt initially does not want to access any funds
The battery manufacturer emphasized that the construction in northern Germany took place on schedule together with the federal government and the Länder. “So far, no financing has been used and Northvolt Germany will not have access to any funds as long as the restructuring of the parent company continues.”
But the timetable for the large construction site is behind schedule. (archive image) Image: Christian Charisius/dpa
The head of the Schleswig-Holstein Chancellery, Dirk Schrödter (CDU), sees the possibility of a restructuring plan together with the creditors. It is a pity that no financing has yet been secured for the parent company in Sweden, explains Schrödter. “It is positive that after the discussions of the last few weeks there is now clarity on the further procedure and next steps.”
“It is positive that construction work in Heide continues and that concrete statements about the timetable have now been made,” Schrödter said. The State will review all issues related to funding legislation together with the federal government. “Issues relating to possible risks to the Federal Government and the State are currently being discussed and assessed in detail with the Federal Government. Therefore, it is not possible at this time to make any statement on the risk position of the Federal Government and the State with respect to the bonds convertibles, as the Chapter 11 process is only just beginning,” Schröder explained.
“The European battery cell industry as a whole is in a difficult situation,” Haux said. The company wants to do justice to this with a strategic realignment. “Since the summer we have implemented numerous efficiency measures which are already having an impact.” The step taken now improves the financial situation and raises new capital.
This means “Chapter 11”
Under Chapter 11, businesses can initially continue to operate under the supervision of a bankruptcy judge and develop plans for debt repayment. Creditors cannot access assets during this period.
Northvolt has been grappling with major financial problems for some time. Among other things, in June the car manufacturer BMW withdrew an order for batteries worth two billion euros.
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– How does Northvolt’s project contribute to Germany’s energy transition and the European market?
, progress has been made, but we are still awaiting concrete steps towards finalizing the financing.” He reiterated the importance of securing funds not only for the construction in Germany but to stabilize the entire Northvolt group.
Despite the delays, Northvolt maintains a positive outlook and has stated that the project is still on track to meet its goals, although contingency plans may need to be implemented if further delays occur. The cooperation between the federal government and the Länder has been highlighted as a critical factor in the project’s potential success.
As the battery market continues to grow, Northvolt’s operations are seen as vital for Germany’s energy transition and the broader European effort to reduce reliance on non-renewable energy sources. Industry experts stress that securing the necessary funds will be crucial for Northvolt to thrive and contribute to the transition toward sustainable energy solutions.
The situation remains fluid, and all stakeholders are urged to move swiftly to secure the necessary financial backing to ensure the project’s long-term viability.