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Re:NewCell throws in the towel – files for bankruptcy

Re:NewCell throws in the towel – files for bankruptcy
Bales of recycled cotton textiles to be processed into Circulose pulp (photo courtesy Renewcell).

In Sweden, the Board of Directors of textile recycling innovator Re:NewCell AB (Renewcell) has announced a decision to file for bankruptcy of the company at the Stockholm District Court.

According to a statement on February 25, 2023, the reason for the decision to file for bankruptcy is that Re:NewCell has not been able to secure sufficient financing to be able to complete the strategic review of its business and operations, announced on November 20, 2023, with satisfactory result.

The company has invested over SEK 1.3 billion to establish one of the most innovative and efficient textile recycling plants globally. The industrial-scale plant in Ortviken currently can produce up to 60,000 tonnes of its proprietary Circulose pulp on an annual basis.

On January 10, 2024, the company announced plans to begin negotiations with the relevant trade unions regarding restructuring of the organization to improve efficiency while maintaining focus on sales.

The planned restructuring would lead to a decrease in the workforce of approximately 25 percent, just over 30 persons, and was anticipated to result in annual operational savings of approximately SEK 35 million in total.

As part of the strategic review, Re:NewCell has had “well-advanced negotiations” with its two largest shareholders, H&M and Girindus, its existing lenders BNP Paribas, European Investment Bank (EIB), Finnvera (as partial guarantor), Nordea, AB Svensk Exportkredit and potential new investors as well as other stakeholders regarding long-term financing solutions.

However, the company notes that it is now clear that these discussions have not resulted in a solution that would provide Re:NewCell with the necessary liquidity and capital to ensure its operations going forward.

The bankruptcy application will be filed at the Stockholm District Court.

I regret that we have been forced to make this decision to file for bankruptcy. As we have a strong belief in the company’s long-term potential, we have together with our advisors spent very substantial time and effort trying to secure the necessary liquidity, capital, and ownership structure for the company to secure its future. As part of the negotiations, we have had intense dialogues with current main owners, new investors, and our banks, as well as other stakeholders. However, these discussions have not been successful. This is a sad day for the environment, our employees, our shareholders, and our other stakeholders, and it is a testament to the lack of leadership and necessary pace of change in the fashion industry, commented Michael Berg, Chairman of the Board of Directors.

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