Lilium, a German electric vertical takeoff and landing aircraft (eVTOL) company often called the Tesla of flying cars, is planning to file for insolvency and will seek self-administration proceedings.
Originally, Lilium had promised to deliver two eVTOLs to customers by 2026, but having exhausted its funds, the firm has announced it will halt production immediately.
Financial troubles halt dreams of vehicle flight
Founded in 2015 by Daniel Wiegand, Lilium thrived amid a global surge in eVTOL investment, securing significant financing that once valued the company at US$3.3 billion. It eventually went public in the United States through a Special Purpose Acquisition Company (SPAC).
Despite burning through cash without government support, Lilium had hoped to raise EUR200 million (US$216 million) from the German federal government and the Bavarian state government, but this request was subsequently denied in late October. Additionally, Lilium raised EUR219 million from the French government to build a battery factory.
Lilium has raised US$1.4 billion, including US$25 million secured in 2023. The company conducted its prototype's maiden flight in May 2019 and planned its first commercial flight for early 2025, which would unlock pre-delivery payments and new investments, providing financing until 2026.
Furthermore, Lilium has received orders and agreements for 780 electric aircraft. According to The Verge, Saudi Arabia has ordered up to 100 Lilium Jets, with an additional four sold to UK-based Volare Aviation. In 2023, Lilium also partnered with a Texas-based aircraft brokerage firm, aiming to become the first company to sell eVTOLs in the US.
As reported by eeNews Europe, a document from Lilium indicates that despite ongoing fundraising efforts, the company has been unable to gather sufficient additional capital to continue operating Lilium and its wholly-owned German subsidiary, Lilium eAircraft.
Consequently, these subsidiaries plan to file for self-administration with a German court in the coming days, allowing Lilium to remain under the supervision of a trustee. The managing directors of these subsidiaries have determined that they are over-leveraged and may be unable to meet existing debt obligations in the near future.
Lilium's management is continuously reviewing whether there are grounds for bankruptcy, and any such review could lead to a formal bankruptcy filing. In the upcoming days, Lilium expects its subsidiaries to petition a competent German court for bankruptcy and self-administration, however, approval of this request is not a guarantee.
Similar to Chapter 11 of the US Bankruptcy Code, this process would protect the company from creditor actions for a limited time while arranging assistance agreements. If unsuccessful, assets may be liquidated.
In the long term, Lilium struggles to secure adequate funding and has cited its failure to obtain a EUR50 million loan guaranteed by the Bavarian state. The company now faces the reality of losing control over its subsidiaries, although there remains a possibility of sudden acquisitions or other financial injections.
For instance, Joby Aviation, another eVTOL company, recently secured a US$500 million investment from Toyota and obtained Part 135 air carrier certification from the Federal Aviation Administration in 2022.
