💥New Chapter 11 Bankruptcy Filing - iM3NY LLC💥
Upstate NY giga-scale lithium-ion battery manufacturer runs out of juice (read: money).
On January 27, 2025, Endicott, NY-based iM3NY LLC and Imperium3 New York, Inc (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Shannon); they intended to be the first commercial U.S.-designed and developed “giga-scale” lithium-ion battery manufacturing company. Another western battery manufacturer in bankruptcy? Hmmm … where have we heard of that before? Oh right, see our coverage on the Northvolt AB cases here:
These debtors were founded in ‘17 by a group of companies that included Charge CCCV LLC (“C4V”) and Magnis Energy Technologies Ltd ($MNS). C4V — which owns 31% of the outstanding common units and 26.7% of the class A preferred units — also holds the design and process development IP and licenses it to the debtors. For its part, MNS is the largest equity holder with 62% of the outstanding common units and 73% of the class A preferred units.
Since ‘17, the debtors have raised >$70mm in equity and >$100mm of debt to create the first “built in America” lithium-ion manufacturing facility.
Hell yeah. Energy independence. Reduced reliance on “CHY-NA”.
And did we mention it was going to be American built? Oh, yes, we did, three times now. Because this was sort of a big deal.
Despite the pressure, for a short while, progress was seemingly going pretty well. Up until ‘22 anyway. The debtors secured a term loan facility from Atlas Credit Partners (“ACP”) and were putting the finishing touches on their Endicott located manufacturing facility but after turning on the lights, the debtors realized there were some pretty glaring faults. By early ‘23, the debtors halted operations and decided that they needed some extra cash to fix technical and production challenges.
After a year and a half of fundraising and two failed transactions, ACP had enough and the debtors were planning to commence chapter 7 proceedings in October ‘24. Enter HSBC Bank PLC (“HSBC”).
HSBC took out ACP and extended $2.8mm of emergency bridge funding — enough to get the debtors to the filing of these chapter 11 cases. As of the petition date, the debtors owe HSBC ~$125.8mm.*
HSBC has also been nice enough to provide the debtors with a $17.5mm DIP facility — comprised of $2.5mm is new money ($1.5mm available on an interim order) and a $15mm roll-up (granted on an interim order). Yup, you read that right but let’s repeat it anyway: the DIP includes $2.5mm of new money ($1.5mm available on an interim order) and a $15mm roll-up (granted on an interim order). Wanna guess whether the Office of the United States Trustee (“UST”) had an issue with these terms? 🤔
⚡️Spoiler alert: the UST had an issue with these terms.⚡️
Judge Shannon, however, did not. He noted:
“We look at these ratios as kind of an indicator and a data point about frankly how much of a grab we have - how aggressive perhaps is a lender being? And what we’re trying to anticipate, at least as I sit here, what are the actual consequences of that? And I’m satisfied here that it is a protection that doesn’t necessarily do material violence to the interests of other stakeholders.”The message here? Since there are no junior lenders, the prepetition and DIP collateral package is largely the same, and other stakeholders aren’t affected, the roll-up ratio, while sexy, is not as relevant as it might be in other situations.
It also helps that the DIP facility carries a lower interest rate (SOFR+6%) than the pre-petition debt’s 12.6% default rate. The DIP also has a 0.5% PIK upfront fee on the aggregate principal drawn, and a 2.5% PIK exit fee on the aggregate principal drawn.
As part of a prepetition marketing process, the debtors and their investment banker, Hilco Corporate Finance, have already sent a teaser and NDA to 200 potential buyers and investors. The debtors have 40 days under the DIP milestones to get a bidding procedures motion approved. Let’s see what a half-baked battery manufacturing facility goes for these days.
The debtors are represented by Chipman Brown Cicero & Cole, LLP (William Chipman, David Carickhoff, Mark Olivere, Alan Root) as legal counsel, Novo Advisors, LLC (Rob Vanderbeek) as financial advisor, and Hilco Corporate Finance as investment banker. HSBC is represented by DLA Piper LLP (Stuart Brown, Malithi Fernando, Oksana Koltko Rosaluk, Rachel Albanese) as legal counsel.
*There’s also ~$10mm in unsecured trade debt.
Company Professionals:
Legal: Chipman Brown Cicero & Cole, LLP (William Chipman, David Carickhoff, Mark Olivere, Alan Root)
Financial Advisor: Novo Advisors, LLC (Rob Vanderbeek)
Investment Banker: Hilco Corporate Finance (Richard Klein)
Claims Agent: Stretto (Click here for free docket access)
Other Parties in Interest:
DIP Lender: HSBC Bank PLC
DLA Piper LLP (Stuart Brown, Malithi Fernando, Oksana Koltko Rosaluk, Rachel Albanese)
Large Equityholders: Magnis Energy Technologies Ltd and Charge CCCV LLC
Official Committee of Unsecured Creditors
Legal: Seward & Kissel LLP (Robert Gayda, Catherine LoTempio, Andrew Matott, Laura Miller) and Potter Anderson & Corroon LLP (Christopher Samis, R. Stephen McNeill, James Risener III, Ethan Sulik)
Financial Advisor: Genesis Capital Partners (Edward Kim)