The Electrovaya-owned subsidiary Litarion has entered into voluntary structured insolvency proceedings in Germany — following a dispute with a landlord — a new press release has revealed.
The news follows on last year’s reveal that the owner of the real-estate used by Litarion in Germany would terminate the company’s lease as of January 31, 2018, if various conditions weren’t met.
Litarion was reportedly planning to meet these conditions and maintain the lease, but faced cash flow problems specifically caused by garnishment processes initiated against it by the landlord — if the company’s account is to be taken at face value.
Why are we reporting on this news? Because Electrovaya (and thus Litarion) is a fairly prominent name in the lithium-polymer battery sector … and as such, such proceedings should have an eye kept on them.
The press release provides further background: “With support from Electrovaya, Litarion attempted to resolve the dispute with its landlord but 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. The Company expects to record a non-cash charge in the second quarter of fiscal 2018. It is expected the German court will shortly assign a preliminary insolvency manager to manage the transition of Litarion’s operations and work to maximize value for Litarion’s creditors and shareholders.”
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 is 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 customized cells, custom modules, and battery systems.”
We’ll keep you posted as the situation develops.