Today, air taxi firm Lilium revealed in a U.S. regulatory filing that its two main subsidiaries will file for insolvency in the near future.
Following the news, Lilium’s share price dropped more than 60%, and is now sitting at just 21 cents.
The Federal Aviation Administration (FAA) had just declared it would introduce a new category of aircraft for air taxis as the agency prepares for their eventual widespread usage.
The filing revealed that Lilium has not been able to raise sufficient funds to continue the operations of its main subsidiaries, Lilium GmbH and Lilium eAircraft GmbH. It explains that the subsidiaries are overindebted and won’t be able to pay their existing liabilities due in the coming few days.
“Within the next few days, the Company expects that the Subsidiaries will file for insolvency in the competent court in Germany and apply for self-administration proceeding pursuant to Section 270(a) of the German Insolvency Code,” explained Lilium in the filing. “However, there can be no assurance that the applications for self-administration proceedings will be approved by the court.”
The news follows a failed attempt by Lilium to convince the Federal Republic of Germany to approve a 50-million-euro guarantee of a total convertible loan of 100 million euros.
Lilium also attempted to make an agreement with the Free State of Bavaria, with a preliminary agreement involving a guarantee of at least 50 million euros. They have yet to reach an agreement.
Lilium filing for insolvency could ultimately lead to its shares being delisted from the Nasdaq Global Select Market. If it is suspended or delisted, it could begin trading ordinary shares over-the-counter.
According to Lilium’s regulatory filing, due to the company’s self-administration proceedings, shareholders are likely to lose the value of their investment.