Sono Motors GmbH has filed an application with the Munich District Court to open protective shield proceedings. Sono wants to restructure itself with the help of Dentons’ restructuring experts. The reason given for the application is indirectly a consequence of the Sion exit and the situation on the capital market.
The protective shield procedure is not exactly the same as the insolvency procedure in self-administration (such as Compleo is currently undergoing), but it has the same goal: the early submission of an insolvency plan is intended to facilitate the reorganization of the company. In parallel to Sono Motors GmbH’s application for a protective shield, Sono Group N.V., the U.S.-listed parent company of Sono Motors GmbH, has also filed an application for self-administration with the competent district court in Munich, seeking to restructure the company.
In the case of Sono Motors, the move comes as no surprise: after a renewed crowdfunding campaign to save its Sion solar electric car, the Munich-based startup had pulled the ripcord and discontinued the Sion program at the end of February. Instead, the company wants to focus on the solar business for B2B customers – for example, integrated solar panels for e-cars, buses or trucks. Following the Sion discontinuation, numerous employees had to be laid off. In March, Sono then announced that insolvency was imminent – as there was not enough money to continue business operations. Under the protective shield procedure, business operations are now to be continued.
The company indirectly cites a consequence of the Sion exit as the reason for the application: “A repayment plan was developed to handle customer claims arising from the Sion reservations. The additional funding required for this was initially offered by a financier,” the current statement reads. “However, in connection with the insolvency of the Silicon Valley Bank and the distress sale of Credit Suisse to UBS, as well as the growing uncertainty in the capital markets associated with these events, this financing was not realized. Further talks with other potential financing partners were also unsuccessful so management was forced to apply for protective shield proceedings.”
“In the current circumstances, the protective shield proceeding offers Sono Motors GmbH the necessary flexibility to sustainably restructure, recapitalize, and realign in the interest of its creditors, suppliers, customers, and employees,” Sono Motors writes. The management is confident that there is a good chance that the reorganization can be successfully carried out under the protective shield procedure, he added. “Detours are part of the founding process and we will continue to strive to implement sustainable solutions with our partners and to thus contribute to the decarbonization of the vehicle market,” said Jona Christians, co-founder and co-managing director of Sono Motors GmbH.
The company is supported in the proceedings by Dentons’ restructuring team led by experienced restructuring experts Holger Ellers and Dirk Schoene. “The focus on retrofitting and integrating solar technology into third-party vehicles is the logical next step. The company’s innovative products in solar technology have the potential of being of great interest to OEMs,” said Schoene. “However, due to changed market conditions, it, unfortunately, became impossible to deal with the legacy costs from the discontinued Sion program using the company’s own funds, so that the application for the protective shield proceeding became imperative to successfully continue the restructuring path already embarked upon.”
Keyword: Sono Motors files for protective shield proceeding