Applications for self-administration proceedings with respect to Sono Group N.V. and Sono Motors GmbH under the German Insolvency Act
May 15 2023 - 9:16AM
On May 15, 2023, Sono Group N.V. applied to the insolvency court of
Munich, Germany, to permit the opening of a self-administration
proceeding (Eigenverwaltung) with respect to Sono Group N.V.
pursuant to Section 270 (b) of the German Insolvency Code
(Insolvenzordnung). On the same day, Sono Motors GmbH, Sono Group
N.V.’s sole wholly-owned subsidiary, applied to the same court to
permit the opening of self-administration proceeding in the form of
a protective shield proceeding (Schutzschirmverfahren) with respect
to Sono Motors GmbH pursuant Section 270 (d) of the German
Insolvency Code. Sono Group N.V. conducts its business through its
subsidiary Sono Motors GmbH, and the terms “we” and “our” used
herein refer to Sono Group N.V. together with its subsidiary Sono
Motors GmbH.
At the end of February 2023, we announced our decision to
restructure our business model to focus exclusively on retrofitting
and integrating solar technology into third-party vehicles going
forward. At the same time, we discontinued our Sion passenger car
program with immediate effect and terminated approximately 250
employees. A repayment plan was developed to handle customer claims
arising from the Sion reservations. We continued to face challenges
to obtain external financing and to date have not been successful
in selling our Sion passenger car project and related assets. After
other financing options failed to materialize, our management
ultimately concluded that Sono Motors GmbH is over-indebted and
faces impending illiquidity (drohende Zahlungsunfähigkeit), with
Sono Group N.V., in turn, becoming over-indebted and also facing
impending illiquidity. As a consequence, management decided to
apply for the opening of self-administration proceedings with
respect to Sono Group N.V. and Sono Motors GmbH with the goal of
sustainably restructuring our business.
Self-administration proceedings are debtor-in-possession type
proceedings under German insolvency law, which are available to
businesses in financial distress and typically aim to preserve the
business and the entity that are the subject of the proceedings. In
these proceedings, management retains control and operation of the
subject company’s business under the supervision of a custodian,
who is initially appointed on a preliminary basis (vorläufiger
Sachwalter). We understand that in the German market a
self-administration proceeding in the form of a protective shield
proceeding, such as the one which Sono Motors GmbH has applied for,
is perceived by suppliers, customers, and potential investors as a
proceeding with improved chances for a successful in-court business
restructuring. We believe that this perception may improve our
chances of sustainably restructuring, recapitalizing, and
realigning Sono Motor GmbH’s business in the interest of its
creditors, suppliers, customers, and employees. In order to be able
to apply for a self-administration proceeding in the form of a
protective shield proceedings, Sono Motors GmbH was required to
provide a third-party attestation that the company is not illiquid
and that the intended restructuring does not manifestly lack the
prospect of success.
Following the filing of their respective applications, Sono
Group N.V. and Sono Motors GmbH are generally prohibited from
repaying any pre-application debt. Furthermore, if and when the
self-administration proceedings are admitted by the court on a
preliminary basis, creditors will be prohibited from foreclosing
against the companies on any claims they may have. In addition,
subject to certain limited exceptions, Sono Group N.V. will lose
control of its sole subsidiary Sono Motors GmbH. We are in the
process of analyzing the potential accounting and financial
reporting implications of the applications for self-administration
proceedings, including with respect to the ability of Sono Group
N.V. to continue to consolidate Sono Motors GmbH while such
proceedings are ongoing.
With the help of external advisors, Sono Group N.V. and Sono
Motors GmbH are in the process of each preparing a draft
restructuring plan to be submitted to the court for approval by the
respective company’s creditors and for confirmation by the court in
the context of the respective proceeding. The draft restructuring
plans will in each case set out how the respective company intends
to restructure its debt and to procure the inflow of new money.
Even if the openings of the respective proceedings are permitted
by the court, the successful conclusion of the respective
proceedings and Sono Group N.V.’s and Sono Motors GmbH’s exits from
the respective proceedings remain subject to a number of
contingencies and risks, including, but not limited to, (i) whether
the companies are able to identify and successfully access
sufficient sources of liquidity to enable a restructuring, (ii)
whether creditors in each case approve the respective restructuring
plan with the required majorities, and (iii) whether the court
confirms the restructuring plan in each case. Should the
self-administration proceedings applied for by Sono Group N.V. and
Sono Motors GmbH, respectively, not be approved or should the
respective draft restructuring plan fail to be approved by the
respective company’s creditors or confirmed by the court, the
respective company would become subject to regular insolvency
proceedings, which could involve its liquidation.
About Sono Motors
Sono Group N.V. (NASDAQ: SEV) is on a pioneering mission to
accelerate the revolution of mobility by making every vehicle
solar. Sono Motors’ disruptive solar technology has been engineered
to be seamlessly integrated into a variety of vehicle architectures
— including third-party OEM cars, buses, refrigerated vehicles, and
recreational vehicles — to extend range and reduce fuel costs as
well as the impact of CO2 emissions, paving the way for
climate-friendly mobility.
Contact
Media:
Jörg Sailer | press@sonomotors.com |
www.sonomotors.com/press
Investors:
Dmitry Lisitsyn | ir@sonomotors.com | ir.sonomotors.com
Forward-Looking Statements
This document includes forward-looking statements. The words
"expect," "anticipate," "intend," "plan," "estimate," "aim,"
"forecast," "project," "target," “will” and similar expressions (or
their negative) identify certain of these forward-looking
statements. These forward-looking statements are statements
regarding the Company's intentions, beliefs, or current
expectations. Forward-looking statements involve inherent known and
unknown risks, uncertainties, and contingencies because they relate
to events and depend on circumstances that may or may not occur in
the future and may cause the actual results, performance, or
achievements of the Company to be materially different from those
expressed or implied by such forward looking statements. These
risks, uncertainties and assumptions include, but are not limited
to, risks, uncertainties and assumptions with respect to: our
expectations regarding the self-administration proceedings, for
which Sono Group N.V. and Sono Motors GmbH have applied, the
outcome of which, if they are approved, is uncertain; our ability
to maintain relationships with lenders, suppliers, customers,
employees and other third parties as a result of our application
for the opening of self-administration proceedings and the related
increased performance and credit risks associated with our
constrained liquidity position and capital structure; our ability
to access the external funding required to successfully restructure
our business; our ability to maintain Sono Group N.V.’s stock
exchange listing; and the length of time that we would operate
under the self-administration proceedings, if these are approved.
Many of these risks and uncertainties relate to factors that are
beyond the Company’s ability to control or estimate precisely, such
as the actions of courts, regulators and other factors. Readers
should therefore not place undue reliance on these statements,
particularly not in connection with any contract or investment
decision. Except as required by law, the Company assumes no
obligation to update any such forward-looking statements.
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