Lilium, a German startup that is one of the most advanced companies in the development of eVTOL aircraft, is going through serious financial difficulties. Its main subsidiaries in Germany, in fact, are preparing to file for bankruptcy, due to its growing cash crunch.
On Thursday, the company announced that subsidiaries Lilium GmbH and Lilium eAircraft will not be able to honor their debts in the coming days.
According to a statement sent to the US Securities and Exchange Commission (SEC), the subsidiaries must resort to German bankruptcy law, requesting a self-administration process.
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During this process, the parent company, registered in the Netherlands as Lilium NV, could lose control over the subsidiaries. The management of the German units would continue to be under the supervision of a custodian and two lawyers, who would act as “bankruptcy administrators.” The goal is to sell the assets or the entire business to maximize returns to creditors.
Lilium is analyzing the possible impacts of the bankruptcy filing of its subsidiaries. If it cannot find new sources of financing, the parent company may also follow suit. Both the parent company and its subsidiaries face severe financial constraints and will not be able to continue operating without external support.
Lilium also warns that, if insolvency occurs, its shares, traded on the Nasdaq stock exchange, may be delisted. In addition, current investors, such as Honeywell, which invested in 2021, will likely lose the value of their investments.
German government withdraws loan guarantees
Lilium’s financial crisis worsened when the German government refused to guarantee half of a 100 million euro loan from the state development bank. The other half would be guaranteed by the government of Bavaria, where the company is headquartered, but negotiations between the parties have not progressed.
Since its founding, the company has spent around €1.5 billion developing the Lilium Jet, its electric vertical take-off and landing aircraft. The first flight of a certified prototype was scheduled for next year, with certification expected in 2026.
Despite claiming to have 780 aircraft on order, including 50 from Saudia and 220 from Brazil’s Azul, the viability of the project remains uncertain.
