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Renowned eVTOL company Lilium's stock price plummeted by 55%, and its main subsidiary will file for bankruptcy

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During Thursday's US stock market session, Lilium, a well-known German electric vertical takeoff and landing (eVTOL) company, saw its stock price plummet by over 55%. The company had previously announced that its two major subsidiaries would file for bankruptcy in the coming days.
In a document submitted to US regulators on Thursday, Lilium, which is listed on NASDAQ, stated that it failed to raise enough additional funds to sustain the normal operations of its two main subsidiaries, Lilium GmbH and Lilium eAircraft GmbH.
Due to insufficient funds, the heads of these subsidiaries have determined that they are already "heavily indebted" and will not be able to pay their maturing debts in the coming days.
The document also mentioned that Lilium's subsidiary management has notified the parent company that they will have to file for bankruptcy under German law and will apply for self management procedures in Germany in the process of doing so. Self management procedure is a legal procedure that allows a company to maintain control over its business during the bankruptcy process, rather than handing over control to the bankruptcy administrator. This is usually a step taken when a company is facing financial difficulties but still has the ability to manage its daily operations.
As of the reporting date, the subsidiary only has limited cash to sustain operations. Unless the subsidiary receives additional funding, they will not be able to carry out their ongoing operations as usual.
Previously, Lilium had attempted to persuade the German federal government to provide national support for it, but ended in failure. Lilium attempted to raise a loan of 50 million euros (54 million US dollars) from the government, but this request was rejected by the Budget Committee of the German Federal Parliament.
Overall, Lilium originally attempted to raise 100 million euros in convertible loans. The German state-owned development bank, Renaissance Credit Bank, originally planned to provide a national aid loan, but this aid was rejected by the federal government.
After being rejected by the federal government, Lilium continued to negotiate separately with the southeastern German state of Bavaria, which is Lilium's headquarters, seeking at least 50 million euros in funding support.
However, Lilium stated on Thursday that it has not yet reached a "principle agreement" with the state of Bavaria. The company claims that once its subsidiaries file for bankruptcy, they generally do not need to repay any debts prior to filing for bankruptcy, and adds that creditors will typically be "prohibited from pursuing any claims against these companies
It is worth noting that the planned bankruptcy filing of these subsidiaries may result in Lilium ultimately being delisted from the NASDAQ exchange or its stocks being suspended.
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