In a critical development for the struggling electric aircraft manufacturer, Lilium GmbH has announced the signing of an asset purchase agreement with Mobile Uplift Corporation GmbH.
Lilium is currently in self-administrated insolvency proceedings, and the latest development means that it will narrowly avoid insolvency.
Mobile Uplift Corporation GmbH was formed by a consortium of European and North American investors. This deal, subject to customary conditions, aims to inject fresh capital into Lilium and pave the way for a potential resurgence.
Financial Headwinds and a Lifeline
Lilium, once a frontrunner in the electric aviation space, has faced significant financial headwinds in recent months.
The company specializes in developing and manufacturing electric vertical take-off and landing (eVTOL) aircraft. It has recently been grappling with insolvency proceedings and a dwindling cash reserve. This agreement marks a crucial step in its bid to restructure and avoid complete collapse.
The acquisition by Mobile Uplift Corporation GmbH will see the transfer of operating assets from Lilium GmbH and Lilium eAircraft GmbH.
German Insolvency Law will govern the use of sale proceeds. Accordingly, no funds will be distributed to the parent company, Lilium N.V.
This arrangement underscores the severity of Lilium’s financial situation. It highlights just how urgent the need was for a capital infusion to keep the company afloat.
Prior to this agreement, Lilium appointed KPMG to the role of advisor. KPMG actively engaged with potential investors interested in acquiring Lilium’s assets or business.
These discussions were crucial in guiding the restructuring process and exploring viable options for the company’s future. The creditors’ committee, a key stakeholder in the restructuring process, has reviewed and considered these investor interests.
Moving Towards Exit from Self-Administration
The planned restructuring is dependent upon the successful closing of the deal. This aims to enable Lilium’s subsidiaries to exit the self administration proceedings.
In a move necessitated by the financial constraints, Lilium terminated the contracts of its remaining employees on December 20, 2024. Lilium took this measure in accordance with German law. However, Mobile Uplift Corporation GmbH intends to immediately re-employ these employees following the acquisition.
The anticipated closing date for the transaction is early January 2025. The successful completion of the deal hinges on the satisfaction of certain conditions precedent. these include the formal opening of the insolvency proceedings and the approval of the creditors’ committee.
Lilium CEO Comments
Lilium CEO Klaus Roewe expressed optimism regarding the recent agreement. “We are very pleased to announce the signing of an investment agreement with a very experienced consortium of investors, which is a major breakthrough.”
He further pointed out that the swift closing of the deal in early January will be crucial for restarting the company’s operations.
Looking Ahead
This agreement offers a glimmer of hope for the electric aircraft developer. However, the company faces significant challenges ahead.
The successful implementation of the restructuring plan, the integration of new investors, and the reestablishment of a stable financial foundation will be critical to the company’s long-term survival and success.
The electric aviation sector remains highly competitive, and Lilium will need to demonstrate its ability to overcome these obstacles and regain its position as a leader in this emerging field.
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