Canadian battery maker Electrovaya has started a voluntary insolvency process of its German arm, Litarion.
Electrovaya said the move is in response to an early notification by Li-Tec Battery, the owner of the premises occupied by Litarion, that it would terminate Litarion’s lease as of 31 January 2018 “unless certain conditions were met”.
Electrovaya said while the company had intended to keep the lease, Litarion’s cash flow had been “materially negatively impacted by the demands and garnishment processes initiated against it by the landlord”.
Despite moves to resolve the dispute, Electrovaya said “negotiations ultimately proved unsuccessful and it was determined that the only viable alternative was to have the managing directors of Litarion voluntarily place it into preliminary insolvency proceedings”.
In addition, Electrovaya said in a 25 January statement “large battery orders from Litarion’s OEM partners and other customers have taken longer than expected to materialise.” As a result, “the cost of maintaining Litarion’s substantial infrastructure negatively affected Electrovaya’s financial results and liquidity position”.
A German court is now expected to assign a preliminary insolvency manager “to manage the transition of Litarion’s operations and work to maximise value for Litarion’s creditors and shareholders”, Electrovaya said.
“While current circumstances on the ground in Germany dictated Litarion enter into this process, Electrovaya believes that it ultimately no longer needs its own contract manufacturing facilities and, given alternate supply arrangements are in place, the company expects that the proceedings will not impact the company’s ability to continue to fulfil current and future customer orders for its customised cells, custom modules and battery systems.”
