Lilium NV ( LILM ) shares are trading lower by 38% to 13 cents during Friday’s session after the company announced its principal German subsidiaries will apply for self-administration proceedings in a German court due to insolvency.

What To Know: Lilium announced plans to seek self-administration proceedings for its main German subsidiaries due to the failure of a government-backed loan from KfW, which was critical for attracting further investment.

CEO Klaus Roewe stated that a €100 million loan was essential for securing additional private capital. Without this support, the company had no choice but to file for self-administration to preserve its operations.

Lilium had also been in discussions for a French government guarantee on a €219 million loan for a new battery factory. The company is anticipating pre-delivery payments and investments as it prepares for the first flight of its Lilium Jet in early 2025, with over 780 orders globally.

The company says the self-administration process allows management to continue operations under court supervision and aims to restructure the business.

Roewe meanwhile expressed regret over the insolvency, emphasizing the hope that this step would provide a fresh start for the Lilium Jet and contribute to aviation’s decarbonization efforts. The affected subsidiaries include Lilium GmbH and Lilium eAircraft GmbH, with further updates for stakeholders expected soon.

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According to data from Benzinga Pro, LILM has a 52-week high of $1.41 and a 52-week low of $0.13.