Sono Motors GmbH filed for protective shield proceeding
On 15 May 2023, Sono Motors GmbH filed an application for a protective shield proceeding at the competent local court of Munich. Business operations will continue within the framework of the protective shield proceeding.
At the end of February 2023, Sono Motors had announced that it would restructure its business model and focus exclusively on retrofitting and integrating solar technology into vehicles of third parties and fleet operators going forward. At the same time, the company discontinued its Sion program with immediate effect and terminated around 250 employees. 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.
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.
The purpose of the protective shield proceeding is to successfully restructure companies in an organized process. The protective shield proceeding is one of the modern instruments of German restructuring law to enable a company’s restructuring. An application for a protective shield proceeding may not be made, if a company is already illiquid, but rather only in case of impending illiquidity or over-indebtedness. The intended restructuring may also not manifestly lack the prospect of success and illiquidity should not be expected in the course of the protective shield proceeding.
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. The company intends to implement the changed focus on retrofitting and integrating solar technology into third-party vehicles in the context of the protective shield proceeding. In this area, Sono Motors GmbH already has non-binding letters of intent and customer orders/contracts with a total of 25 partners.
The company’s management is confident that there are good chances of successfully restructuring the company’s business under the protective shield proceeding. Jona Christians, co-founder and co-managing director of Sono Motors GmbH: “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.”
In connection with the proceeding, the company is being supported by Dentons’ restructuring team led by the experienced restructuring experts Dr. Holger Ellers and Dirk Schoene.
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. 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.”
Also on 15 May 2023, Sono Group N.V., the U.S.-listed parent company of Sono Motors GmbH, filed an application for self-administration at the competent local court of Munich seeking a corporate restructuring. Sono Group N.V. is being supported in its efforts by SGP Schneider Geiwitz and its restructuring experts Christian Plail and Matthias Räupke.