Update: Adjusted the headline and the second paragraph to be more accurate.
WM Motor still has commercial value and some of its creditors are willing to reorganize, it said.
(Image from WM Motor's Weibo.)
Financially troubled Chinese electric vehicle startup WM Motor has filed for pre-restructuring in an attempt to find a new life through debt restructuring.
WM Motor filed the application with a court in Shanghai, according to a document made public on October 9 by China's national enterprise bankruptcy information disclosure platform.
The document contains no further details other than the date of the filing, the name of the court and that the applicant is WM Motor Technology Group Co.
After the case sparked widespread discussion, WM Motor released a statement on Weibo explaining the move.
Since its inception in late 2015, WM Motor has seen rapid growth, but in recent years the company has fallen on hard times due to factors including the Covid pandemic, a poor capital market, fluctuating raw material prices, and setbacks in access to capital, the statement said.
However, WM Motor is not going to fall on its face and hopes to save itself by realigning its strategy and resolving its debt issues, the company said.
WM Motor still has commercial value and some of its creditors are willing to reorganize, so the company has submitted a pre-restructuring application to the Shanghai No. 3 Intermediate People's Court, according to the statement.
WM Motor will bring in strategic investors globally in the action to achieve a rebirth, it said.
"Through the pre-restructuring process, we will thoroughly review the company's operations and business model, and optimize each division and business in order to reduce costs, improve efficiency and achieve sustainable development," the statement read.
WM Motor will consult with creditors, shareholders, and potential investors to reach the best solution, it said.
In the meantime, WM Motor will continue to provide customer service to its vehicle owners.
"We will closely monitor market changes and industry trends and continue to improve our products and services with the aim of re-emerging after pre-restructuring," the statement read.
WM Motor was founded at a time comparable to other Chinese EV makers including Nio (NYSE: NIO), Xpeng (NYSE: XPEV), and Li Auto (NASDAQ: LI), and had delivered models in volume including the E5, EX5, EX6, and W6.
The company has two manufacturing bases in China built on Industry 4.0 standards, and has been one of the few companies to have both manufacturing bases and NEV production credentials.
However, last year the company began to experience financial difficulties and tried to save itself through measures including salary cuts and layoffs.
WM Motor had planned a backdoor listing at the end of 2022 through a reverse takeover of Apollo Future Mobility Group (HKG: 0860), which is listed in Hong Kong.
That plan has fallen apart, however, and on September 8 Apollo said in a Hong Kong stock exchange announcement that the parties had agreed to terminate the agreement to acquire WM Motor, and that the acquisition would therefore not proceed.
Three days after that plan was abandoned, US-listed Chinese used car dealer Kaixin Auto Holdings (NASDAQ: KXIN) announced on September 11 that it and WM Motor had signed a non-binding letter of intent to acquire 100 percent of its shareholders by issuing a certain number of new shares.