Case Summary: iM3NY Chapter 11

Business Description

Headquartered in Endicott, NY, iM3NY LLC ("iM3NY"), along with its Debtor affiliate Imperium3 New York, Inc. ("Imperium3", and collectively with iM3NY, the "Company") is a pre-revenue enterprise aiming to become the first commercial U.S.-designed and developed Giga-scale lithium-ion battery manufacturer.

The Company's manufacturing facility in Endicott, NY, is nearing completion and currently employs 22 people. iM3NY focuses on producing competitive-scale lithium-ion battery cells using BM-LMP materials, which are expected to be more efficient and cost-effective for use in Grid Energy Storage systems.

• The Company has secured over $70 million in equity contributions and more than $100 million in debt financing to support its operations.
• As of YE 2024, Imperium3 reported a net operating loss of $142.6 million.

iM3NY filed for Chapter 11 protection on Jan. 27 in the U.S. Bankruptcy Court for the District of Delaware. As of the Petition Date, the Debtors reported $50 million to $100 million in assets and $100 million to $500 million in liabilities.

Corporate History

Founded in 2017, Imperium3 was established through a collaboration among Charge CCCV LLC (“C4V”), Magnis Energy Technologies Ltd (“Magnis”), Boston Energy and Innovation, Primet Precision Materials, and C&D Assembly. The initiative was launched to advance U.S. domestic lithium-ion battery manufacturing, leveraging C4V's exclusive U.S. license for prismatic cell design and manufacturing processes.

Key Agreements and Ownership Structure

• In April 2021, C4V granted iM3NY a license to use its intellectual property, including patents and know-how related to BM-LMP cathode materials.
• Magnis, an Australian public company, holds approximately 62.0% of iM3NY's common units and 73.0% of its Class A preferred units, making it the majority equity holder.
• C4V, a New York-based company, owns 31.0% of iM3NY's common units and 26.7% of its Class A preferred units.

iM3NY owns 95.5% of Imperium3. Additional ownership stakes are held by Riverstone Credit Partners (4%), Prisma Pelican Fund LLC (0.25%), and HSBC Bank PLC (0.25%).

Operations Overview

The Company is in the final stages of establishing a Giga-Factory with the capacity to produce one gigawatt-hour (GWh) of lithium-ion cells annually. The facility will manufacture BM-LMP cells for Grid Energy Storage systems, targeting applications with over 20 KWh capacity.

Technology and Certifications

• The Company's BM-LMP technology offers enhanced energy density, high-rate capability, and superior safety features, particularly in thermal runaway scenarios.
• iM3NY has obtained UN38.3, UL1973, and UL1642 certifications and is pursuing additional certifications for manufacturing, transportation, and marketing of its products.

Manufacturing and Employment

• The Endicott facility is central to the Company's operations, with a current workforce of 22 employees.
• The Company utilizes licensed technology from C4V to produce its advanced battery cells.

Prepetition Obligations

Top Unsecured Claims

Events Leading to Bankruptcy

Funding Challenges and Operational Setbacks

• The Company completed construction of its facility in mid-2022 and began production of battery cells by late 2022. However, technical and production challenges arose by early 2023, requiring additional engineering and capital expenditures to optimize processes and equipment.
  • These challenges necessitated further funding, but the Company was unable to secure viable capital sources despite its efforts.
• By the end of 2023, the Company breached several covenants under the Credit Agreement, prompting R-SPV II, L.L.C. (the "Former Lender") to appoint two independent board members. At this point, the Company remained pre-revenue, relying solely on the Former Lender for working capital.
• In January 2024, the Company received an investment proposal from a metals and mining asset manager, but the transaction failed to materialize due to disagreements between the asset manager and the Former Lender, terminating in April 2024.
  • A subsequent non-binding term sheet from a strategic investor in summer 2024 also fell through as the investor couldn't secure financing for the acquisition.
• In September 2024, the Former Lender withheld additional working capital, leading the Company to lay off all employees temporarily in October 2024. The Company planned a Chapter 7 bankruptcy but proceeded with Chapter 11 due to Emergency Bridge Funding from HSBC.
• On October 24, 2024, the Former Lender assigned its interests to HSBC under an Assignment Agreement, replacing the board members with Brian Ford and Wayne Morrison to guide restructuring.
• HSBC's Emergency Bridge Funding enabled the Company to rehire 22 employees, restart operations, achieve key certifications, and begin commercializing lithium-ion battery cells in early 2025.

Prepetition Marketing Process

• On December 31, 2024, the Company engaged Hilco Corporate Finance to advise on selling its business/assets or restructuring its balance sheet.
  • Hilco created a teaser and CIM, contacting over 200 potential buyers/investors. Several parties returned NDA comments, with CIM distribution ongoing.
  • The marketing process continued post-bankruptcy filing.

Postpetition Financing

• The Company secured a $2.5 million DIP Facility from HSBC, including a $15 million roll-up of existing debt, to fund operations and bankruptcy costs.
  • The DIP Facility, maturing 90 days post-interim order or upon plan confirmation, featured milestones like commencing Chapter 11 cases, engaging an investment banker, and approving bidding procedures.
  • Key milestones included asset sale approval by day 90 and a final DIP order by day 30 post-filing.
  • The DIP Lender received superpriority claims and liens on Company assets, with the facility negotiated at arm's length as the only viable option.
• The Company lacked alternative financing, necessitating the DIP Facility to sustain operations and facilitate restructuring.

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