Kirkland & Ellis and A&O Shearman are advising Swedish battery maker Northvolt as it enters Chapter 11 restructuring proceedings, with court filings stating that a total of $5.84bn in total funded debt obligations has left the company in a ‘dire’ liquidity position.
Last Thursday (21 November), Northvolt filed for Chapter 11 protection in a Texas court to ‘restructure its debt, appropriately scale the business to current customer needs, and secure a sustainable foundation for continued operation’, according to a press release.
LB understands that the multinational Kirkland team includes partners Kon Asimacopoulos, Sean Lacey, Charlotte Wheeler, and Dan Stathis on the deal in London, along with Edward Sassower, Christopher Greco, and Ciara Foster in New York, and John Luze in Chicago.
The London-based A&O Shearman team includes restructuring partner Katrina Buckley and project finance partners Rachel O’Reilly and Michael Diosi, according to people with knowledge of the matter. In January, O’Reilly and Diosi, while at legacy A&O, advised Northvolt on the $5bn project financing of its first gigafactory in Sweden, Northvolt Ett.
This is understood to mark Kirkland’s first work for Northvolt. The firm has recently worked on major Chapter 11 filings including the bankruptcy of Intrum, another Swedish company, earlier this month, and advised Scandinavian airline SAS in its Chapter 11 proceedings, which ended when the company exited bankruptcy in August 2024.
‘This appears to be the third large Swedish situation recently that has first filed for US Chapter 11’, commented a restructuring partner at a leading firm.
‘It obviously calls into question the effectiveness of the available Swedish processes but highlights yet again the strength of Chapter 11 as a mechanism to bring in protected DIP funding and restructure a group against the backdrop of a stay which is, for the most part, respected globally’, the partner continued.
Northvolt said in a statement that the restructuring will allow it to secure approximately $245m in new funding, including $100m in debtor-in-possession (DIP) financing from its existing customer, Swedish truck manufacturer Scania, along with $145m in cash collateral.
Northvolt is advised by Teneo on restructuring and communications, with London-based senior managing director Scott Millar leading. He stated in court filings that ‘Northvolt’s liquidity position has become dire’, and explained that as of petition date the firm had only one week of cash left – around $30m.
His filing also noted that the European electric vehicle market declined in 2023, mainly due to economic uncertainties and operational challenges affecting battery manufacturers worldwide. At the same time, established Asian manufacturers continued to grow, creating pressure on newer battery makers like Northvolt, which recorded a net loss of $1.6bn in 2023.
The Chapter 11 filing follows unsuccessful efforts to secure liquidity over the past few months, including a $154m bridge facility in August. In September, Northvolt explored its options and received $50m from its shareholders. But financial conditions continued to deteriorate until the company’s position became unsustainable.
This follows several rounds of fundraising from January 2017 to January 2024, during which Northvolt raised over $8bn, according to filings. The investments included support from the Swedish and other European governments, as well as from Goldman Sachs and Volkswagen Group in 2019.
Northvolt is also advised on the proceedings by Haynes and Boones as local Texas counsel and Mannheimer Swartling as local Swedish counsel. The restructuring is due to complete by the first quarter of 2025.