Wolfspeed Inc. ( WOLF ) shares are trading lower Wednesday following reports indicating the semiconductor company is nearing a bankruptcy deal with key lenders, including Apollo Global Management.

What To Know: The plan involves a prepackaged Chapter 11 filing that would allow Wolfspeed ( WOLF ) to quickly reduce its debt burden while continuing operations.

According to Bloomberg, Wolfspeed ( WOLF ) would enter bankruptcy long enough to reduce debt. This structure, intended to minimize time in court and legal costs, would also provide a rare recovery for shareholders, who may retain up to 5% equity under the proposed deal. Most bankruptcies result in shareholders being wiped out entirely.

Wolfspeed ( WOLF ) has faced financial and operational struggles for years, particularly with production issues at its silicon carbide wafer facility, critical for supplying chips used in electric vehicles and industrial electronics. In May, the company disclosed it had hired restructuring advisers and warned that bankruptcy was one option on the table.

Wolfspeed ( WOLF ) and Apollo declined to comment on the report.

WOLF Price Action: Wolf shares were down 30% at 87 cents at the time of writing, according to Benzinga Pro.

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