Lilium Files for Insolvency

(Reuters) – German air-taxi developer Lilium announced on Thursday that two of its subsidiaries in Germany, Lilium GmbH and Lilium eAircraft GmbH, are filing for insolvency due to unsuccessful negotiations with state and federal governments to address its cash crisis.

Following this announcement, Lilium's U.S.-listed shares plummeted by 57%, dropping to 23 cents. The subsidiaries reported to the parent company that they are over-indebted and will not be able to meet their debts in the upcoming days.

According to a regulatory filing, Lilium is also assessing whether it may need to file for its own insolvency.

The company, part of a select group of air-taxi developers aiming to transform urban travel, faces a cash crunch while still working on aircraft that have not yet been approved to carry passengers.

Lilium had requested a guarantee of 50 million euros ($54 million) from the German federal government to secure a 100 million euro convertible loan from KfW, the German state-owned development bank. However, indications suggest that the federal government would not grant this request, and discussions with Bavaria, where Lilium is headquartered, have not led to an agreement for at least 50 million euros.

Should the insolvency filings proceed, Lilium's ordinary shares may face delisting from the Nasdaq or be suspended.

Founded in 2015, Lilium aims to capture the regional transport market with a 250 km (155 miles) range jet capable of carrying up to six passengers. This sets it apart from many competitors focusing on shorter trips between urban centers and suburbs.

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