Houston, Texas – Northvolt AB, the Swedish electric vehicle supplier, has sought bankruptcy protection in the US after failing to secure necessary rescue funding, putting the company in a tight financial position with only a week’s worth of cash left in its accounts.

The struggling battery maker is embarking on a Chapter 11 bankruptcy restructuring process, revealing its precarious financial situation with $30 million in available cash and a staggering $5.84 billion in debt. This move places Northvolt among the most indebted companies to file for bankruptcy in the US this year, following closely behind another Swedish entity, Intrum AB, which recently made a similar filing.

Facing dwindling funds and mounting pressure, Northvolt made the decision to utilize the US bankruptcy legal system to create a structured framework for existing investors and potential financiers. This decision comes after months of dialogues with stakeholders, including owners, customers, and creditors, to find a way forward for the company. Despite implementing cost-cutting measures, such as significant workforce reductions and the halting of expansion plans, Northvolt found itself unable to overcome financial challenges following the loss of a key contract and the inability to access a substantial green loan.

Northvolt Ett, the flagship factory in Sweden, will continue operations as the company navigates through the reorganization process under Chapter 11. The company reassured customers, vendors, and employees that deliveries would continue, critical obligations would be fulfilled, and wages would be paid as usual.

During a recent hearing, US Bankruptcy Judge Alfredo Perez approved Northvolt’s request to access bankruptcy financing to cover essential expenses, including employee wages, during Chapter 11 proceedings. Despite the announced job cuts, Northvolt still maintains a workforce of approximately 6,400 employees across multiple locations.

The Chapter 11 process provides Northvolt with access to around $145 million in cash collateral, with additional debtor-in-possession financing of $100 million from Scania CV AB. The company’s subsidiaries overseeing planned factories in Germany and Canada are not part of the Chapter 11 process but have announced postponements to their projects.

Northvolt’s challenges underscore the complexities faced by companies in the rapidly evolving electric vehicle market and the critical need for sustainable financing solutions to support their growth and innovation initiatives.