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Volocopter continued certification flight tests of the VoloCity even as it operated under insolvency administration.
Once the leaders in a nascent market, German electric air taxi startups Lilium and Volocopter are clinging to diminishing hopes of financial rescue. The latter has joined the former in full insolvency proceedings, which could lead to a sell-off of its assets, although talks with a potential investor continue.
- Volocopter is in negotiations with an investor
- A Lilium rescue is still possible but looks remote
Volocopter filed for provisional insolvency at the end of December, having failed to secure additional funding to complete certification of its VoloCity two-seat electric vertical-takeoff-and-landing (eVTOL) aircraft; it had been on track to achieve certification before any of its peers.
Under German insolvency law, the company had until the end of February to secure funding before bankruptcy proceedings began. The deadline passed, and on Feb. 28, Volocopter filed for regular bankruptcy protection. On March 3, the company furloughed its approximately 500 employees because it could no longer pay their salaries. Volocopter’s home state of Bavaria will cover those salaries through June.
Sources say Volocopter has negotiated a funding deal that awaits a final commitment by an unidentified investor.
Meanwhile, two investors are working on a potential rescue deal for Lilium, even after the insolvent startup’s newly established successor company was forced to file for bankruptcy. But insiders say chances that they will succeed are extremely slim.
Lilium Aerospace, set up only in early January, filed for bankruptcy on Feb. 21. “As the funding options to secure Lilium’s future have not materialized in time, Lilium Aerospace has filed for insolvency today,” the company said, announcing that operations had ceased.
The original company filed for insolvency in October after the German parliament’s budget committee refused to approve a €100 million ($105 million) loan guarantee, a gesture of support upon which Lilium’s existing investors had insisted (AW&ST Oct. 28-Nov. 10, 2024).
The search for fresh funding turned into further drama in subsequent weeks. Sources close to the negotiations say Lilium was close to signing with an investor willing to inject €300 million, but the financing fell through on Dec. 19.
The next day, the company laid off all its employees. But on Dec. 21, Marian Bocek, CEO of Slovakian battery manufacturer InoBat and a Lilium supplier, approached the administrator with a new proposal under which he would inject about €150 million as part of a bigger €200 million package that included some other investors. A rescue deal was announced on Dec. 24, and all employees were told they would be rehired.
The recapitalization would have triggered further financial support, one insider says. This would have given Lilium access to more than €500 million, probably sufficient enough to carry the company through certification of the Lilium Jet.
According to the sources, Lilium Aerospace planned to restart operations quickly on Jan. 7 so as to lose no more time. Once most employees had returned and the supply chain had been reengaged after a three-month hiatus, Lilium planned to fly the Lilium Jet for the first time around midsummer.
However, the transfer of money continued to be delayed. One source familiar with the situation says Bocek had proved that the funding was there, but several banks that had been consulted were unable to follow through on the specific transfer process requested by his backers.
Bocek and the other investor, whose financing collapsed in December, are continuing their efforts to take over Lilium even after the second bankruptcy filing. But employees, who had not been paid for two months and had no secure future at Lilium in sight, have begun to accept jobs elsewhere, and the startup’s suppliers have redeployed their teams to other projects.
Lilium’s assets, including its intellectual property, are now likely to fall back to the original company, which will enter a full-blown insolvency process, different from the restructuring in self-administration it has pursued so far.
If Lilium cannot procure a comprehensive sale as expected, it must sell individual assets to maximize creditor returns. Among other assets are two almost fully assembled Lilium Jet prototypes parked in a hangar next to the company’s headquarters in Munich.
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