German flying taxi startup Lilium, which recently filed for insolvency after failing to raise capital, could now face legal action for allegedly misleading shareholders, as several law firms encourage investors to join a class action lawsuit.
At the time of publication, Sifted counted nine US firms that are urging shareholders who’ve lost money to get in touch to learn about how they might recover losses.
Some of the law firms state that the company made “false and misleading statements” to the market this year, regarding its progress in fundraising and “overstated its likelihood” of raising the necessary funding to continue its operations, causing investors to suffer “damages”.
Lilium was founded in 2015 and raised $426m from investors including Atomico, Earlybird and Tencent, before listing on the Nasdaq via a SPAC in 2021. Since then its share price has trended downward by 93% and it has failed to meet the milestones it set out at IPO, such as achieving revenue of €240m by the end of 2024.
On October 29th, Lilium received notice of delisting from Nasdaq following the announcement of its insolvency.
Lilium declined to comment.
What’s being alleged?
The majority of these law firms are encouraging shareholders to get in touch if they purchased Lilium stock between June 11 and November 3 this year. They say the German startup overstated the progress of its fundraising activities and the likelihood of it obtaining funds and failed to disclose its imminent insolvency.
In its Q1 2024 shareholder letter, Lilium stated it “expected” to receive a €100m loan guarantee from the German federal government and the state of Bavaria and that the due diligence process, which was already underway, would take just six to eight weeks.
These talks to secure a loan fell through in mid October and Lilium filed for insolvency on October 24th. Upon this news, Lilium’s stock price fell 61% at approximately 20 cents per share the same day.
While Lilium is in a tight spot financially, the company could survive if a buyer or investor is found by the end of the year. Tax consulting and auditing firm KPMG was recently commissioned to find a rescuer.
Sifted understands there are some interested parties from within and outside Germany.
Read the orginal article: https://sifted.eu/articles/law-firms-clammer-to-sue-lilium/
