Swedish battery manufacturer Northvolt said Thursday it has filed for bankruptcy protection in the US to enable debt restructuring and new funding opportunities, Kallanish reports.

The company filed for Chapter 11 in the US Bankruptcy Court for the Southern District of Texas, and may take other legal actions in other jurisdictions to facilitate the US proceedings, which include entities in the US, Sweden and Poland.

The voluntary reorganisation covers Northvolt AB and certain subsidiaries. Northvolt Germany and Northvolt North America, the subsidiaries with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process. Through the restructuring, the company plans to make deliveries to customers and fulfil obligations to critical vendors and staff wages.

 Calling the move a “decisive step,” interim chairman Tom Johnstone explains Northvolt will be able to continue its mission to establish a homegrown, European industrial base for battery production.

The manufacturer says its flagship gigafactory, Northvolt Ett, and Northvolt Labs – both in Sweden – will remain operational. The aim is to ramp up battery production to meet customer commitments.

In fact, one of its existing customers has promised continued support, committing $100 million in new financing in the form of debtor-in-possession (DIP) financing. This is a specialised type of financing for businesses that are going through Chapter 11.

Some of its customers include Volkswagen, BMW, Scania and Volvo Cars.

The company also said it will be able to access new sources of funding, including around $145m in cash collateral.

“Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification,” adds Johnstone.

The restructuring is expected to be complete in Q1 2025.