The reconstruction provides access to $145 million in liquid funds from a security package and $100 million in new financing from customers. Truck manufacturer Scania tells TT that they are providing part of the financing to support production in Skellefteå.
Chapter 11 is often referred to as a "reconstruction bankruptcy". It can be used when companies want to continue operating but need time to restructure their economy to pay off their debts.
The operations at Northvolt Ett, the company's flagship factory in Skellefteå, and Northvolt Labs in Västerås will continue as usual.
Continues to pay salaries
The company will continue to deliver to customers while fulfilling its obligations to suppliers and paying salaries to employees.
"This step will enable Northvolt to continue its mission to establish a domestic, European industrial base for battery production," says Tom Johnstone, interim chairman of the board at Northvolt.
The Unionen trade union writes in a written comment to TT: "It is too early for us to say what this will mean for our members in the short and long term, so we are monitoring this closely."
IF Metall's deputy agreement secretary Simon Petersson writes to TT: "It is a welcome message that Northvolt now sees a way forward to secure our members' jobs and continued production in Sweden."
"A welcome and pleasant message"
Lorents Burman (S), chairman of the municipal council in Skellefteå, sees the message as positive. It gives Northvolt a breathing space and allows them to focus on the reconstruction and, above all, production, he believes.
It cannot happen that Europe's first and largest battery factory goes bankrupt. There are both geopolitical and geo-economic reasons why it cannot happen.
Vargas Holding, which owns 7.8 percent of Northvolt's shares, writes in a comment to TT: "We have great confidence in Northvolt's ability to navigate through this period. A Chapter 11 reconstruction provides stability to handle the very challenging situation."
The restructuring process is expected to be completed during the first quarter of 2025.
Chapter 11 is often referred to as a "reconstruction bankruptcy". It is suitable for companies that want to continue operating but need time to restructure their economy to pay off their debts.
Another advantage of Chapter 11 is that it temporarily stops debt collection claims from creditors.
Chapter 11 can be applied for voluntarily, or it can be imposed if three or more creditors file an application with the US bankruptcy court.
Once the application is submitted, creditors are temporarily prohibited from taking any action. The company or individual has four months to come up with a reorganization plan, but it can be extended to 18 months. After that, creditors can propose reorganization plans.
The plan is essentially a contract between the debtor and the creditor that defines how the business will operate and fulfill its economic obligations. Most plans include some cost-cutting measures to reduce costs and free up assets.
When a company or individual submits the plan, creditors vote on whether to accept it. They are usually cooperative, as the next step is to apply for a so-called Chapter 7 bankruptcy – where all assets are liquidated and creditors may end up with no compensation.
Source: Debt.org, an American financial aid organization
