The electric takeoff and landing vehicle (eVTOL) developer Lilium (Munich, Germany) announced on Oct. 24 that it is filing for insolvency after not being able to acquire funding to continue operations in its Lilium GmbH and Lilium eAircraft GmbH subsidiaries. Lilium declared that fundraising efforts had failed after the German government refused to approve a loan from state-owned development bank KfW for €100 million, and the company has been unable to reach an agreement in principle with the Bavarian government to guarantee a €50 million loan. Many sources notes that Lilium N.V is now reviewing whether there are grounds for its own insolvency.  

Lilium, founded in 2015, began initial production of the Lilium Jet in 2023, with an entry-to-service planned for 2026. According to The Verge, Lilium has already begun assembling its first two eVTOL aircraft in Germany, while working toward certification from the EASA and FAA. As of May 2024, Lilium also noted an order pipeline consisting of more than 780 Lilium Jets, including binding orders and MOU agreements from operators in the U.S., South America, Europe, Asia and the Middle East. Lilium was also in advanced discussions regarding a French government guarantee of a €219 million loan to finance a battery factory and an assembly line in the Southwest of France.

“Our plan was to obtain shareholder investment in a new funding round anchored by a German government backed loan of €100 million,” Lilium CEO Klaus Roewe says. “We had already conditionally secured additional private capital to complement the KfW loan. However, the Budget Committee was unable to agree on the loan and Bavaria couldn’t do it alone.”

Lilium’s international competition is receiving grants and loans in the U.S., France, China, Brazil and the U.K. Therefore, German government support was seen by Lilium investors as critical to retain market confidence and potential future investment. The company says that German government support of the KfW loan was a closing condition to already committed private funding and without this support, Lilium was left with no alternative but to cause the principal German subsidiaries to file for self-administration.

Filing for self-administration proceedings will follow a lengthy and complex government approval process for a loan from KfW. “We deeply regret the insolvency and its consequences for all stakeholders at such a crucial stage of our company’s development,” Roewe says. “However, while there is no guarantee for success in insolvency proceedings, we hope that the Lilium Jet will get a chance for a fresh start after the self-administration process is completed.”

Self-administration, if and when granted by the court, aims to preserve and continue the business that is the subject of the proceedings. Management would retain control and would continue operating the business under the supervision of a custodian. The procedure is often used to initiate investment by new parties or a process to sell the company’s assets and/or business as a whole. In Germany, the procedure is generally perceived as providing an improved chance for a successful in-court business restructuring.