Lilium NV, the US Nasdaq-listed parent of Germany's Lilium (Oberpfaffenhofen) and Lilium eAircraft, has warned it may have to file for insolvency and stands to lose control of these two wholly-owned overindebted subsidiaries which are themselves due to file for insolvency and self-administration/debtor-in-possession proceedings under German law in the coming days.
In a US stock exchange filing on October 24, the manufacturer of still-in-development electric vertical take-off and landing (eVTOL) aircraft said: "We are in the process of analysing the potential implications for the company resulting from the insolvency proceedings of the subsidiaries. This includes examining whether obligations exist under applicable insolvency law. The management of Lilium NV is continuously reviewing whether there are grounds for its own insolvency as well, and the result of any such review may be that Lilium NV files for regular insolvency proceedings as well."
It added: "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 [...]. However, there can be no assurances that the applications for self-administration proceedings will be approved by the court."
Lilium and its subsidiaries reported limited cash for operations, saying: "Unless the subsidiaries receive additional funds, they will not be able to conduct their ongoing operations consistent with past practice and will need to seek financing from third parties, including any purchaser of their assets."
The company's predicament came after the budget committee of the German parliament on October 17 decided not to approve a EUR50 million euro (USD54 million) guarantee for a contemplated EUR100 million (USD108 million) convertible loan for Lilium from KfW, the German state-owned investment and development bank. In addition, by October 24, Lilium and the Free State of Bavaria could not agree in principle on a guarantee of at least EUR50 million.
Despite "continuous and ongoing fundraising efforts," Lilium said it was unable to raise sufficient additional funds to continue the operations of Lilium GmbH and Lilium eAircraft GmbH. As a result, the companies are overindebted and unable to pay their due liabilities within the next few days.
In a separate statement, Lilium said it faces significant international competition in receiving grants and loans from countries like the United States, France, China, Brazil, and the United Kingdom. To maintain market confidence and attract future investments, Lilium investors viewed German government support as essential. CEO Klaus Roewe noted that the EUR100 million state-backed loan had been crucial for securing additional private investment.
"We had already conditionally secured additional private capital to complement the KfW loan," he said, but without the government's support the German subsidiaries had no alternative but to file for self-administration.
Additionally, Roewe said, Lilium has been in talks for a French government guarantee for a EUR219 million (USD237 million) loan aimed at financing a battery factory and assembly line in southwest France.
The German subsidiaries' self-administration procedures are debtor-in-possession type proceedings under German insolvency law. These are available to businesses in financial distress and typically aim to preserve and continue the business. Self-administration is typically employed to facilitate a new investor process that aims to maximise returns for creditors. The company's management maintains control while operating under the oversight of a custodian, initially appointed as a preliminary supervisor (vorläufiger Sachwalter). To ensure compliance with insolvency laws, two experienced lawyers are designated as chief insolvency officers.
Lilium warned that filing for insolvency and application for self-administration in Germany may lead to the company's ordinary shares being delisted or suspended from trading on the Nasdaq Global Select Market. Should this happen, the shares might only trade over the counter, potentially further lowering the share price. Shareholders are likely to lose value in their investments, it added.
Founded in 2015 and based at Oberpfaffenhofen, Bavaria, Lilium currently employs about 500 aeronautical engineers. The first manned flight of its fully electric eVTOL flying taxi has been postponed until early 2025. Lilium said it had anticipated receiving pre-delivery payments and new investment to finance the company into 2026, when it expected delivery would begin on its current order pipeline consisting of firm orders, reservations, options, and memoranda of understanding for more than 780 Lilium jets to operators in the US, South America, Europe, Asia, and the Middle East.
Saudia Group has ordered up to 100 Lilium eVTOL jets - a firm order for 50 with a further option of 50. The Saudia parent was due to receive the first ones in 2026. South Florida-based start-up UrbanLink Air Mobility partnered with Lilium to buy 20 aircraft. In 2023, Lilium signed a memorandum of understanding with Lufthansa Group to explore a strategic partnership on electric eVTOL aircraft operations in Europe.
