The company announced Thursday that its two main subsidiaries would file for insolvency with a German court following the rejection of a 50 million euro ($54 million) loan guarantee from the Bavarian government. The move undermined the company’s plans to raise money from its shareholders, who saw German authorities’ confidence in the plane as essential and the loan guarantee as a precondition for the deal.

Lilium said it had filed for insolvency under self-administration, which under German law would allow the current owners to retain control and operation of the company as it seeks to sell its assets or persuade an outside investor to buy it.

“We deeply regret the insolvency and its consequences for all stakeholders at such a crucial stage in the development of our company,” Klaus Roewe, CEO of Lilium, said investors. “While there is no guarantee of success in an insolvency proceeding, we hope that the Lilium Jet will have the chance to make a fresh start once the self-administration process is complete.”

The company said it will share more information with investors, customers and employees once the filing and related procedures are completed.

Lilium is one of a growing number of manufacturers developing eVTOL aircraft, which take off vertically like a helicopter but navigate on the wings like an airplane. Its Lilium Jet relies on 30 ducted electric fans that point toward the ground during takeoff and landing but tilt forward to aid cruising flight. Unlike competitors who are designing shorter-range eVTOL air taxis, the design is designed for regional city-to-city travel.

Lilium said it has around 780 firm orders, reservations, options and memorandums of understanding (MOUs) for its flagship model, which it plans to deliver in 2026, from customers around the world. WE, Europe, Middle EastAnd Asia. The manufacturer in 2023 started to assemble a first series of full-size prototypes, one of which exposed at the National Business Aviation Association-Business Aviation (NBAA-BACE) Convention and Exhibition in Las Vegas earlier this month.

But without support from the German government, whose counterparts in other countries have poured money into domestic eVTOL manufacturers, investors were not confident enough to back a new capital raise.

Lilium said it was separately in “advanced discussions” with the French government for a loan of around 220 million euros ($238 million), which would have financed the construction of a battery factory and assembly line in the country. The company hopes to receive additional funds and revenue from pre-delivery payments next year after the first test flight of the Lilium Jet prototype, which it said would have kept it afloat until 2026.

“Self-administration, if and when granted by the court, is intended to preserve and continue the business that is the subject of the proceeding,” Lilium said. “In Germany, the procedure is generally seen as offering a better chance of a successful corporate restructuring in court.”

Lilium last year became the first eVTOL aircraft manufacturer to obtain certification bases for its design from the FAA and the European Union Aviation Safety Agency (EASA).

The company had planned for its American operating partner UrbanLink Air Mobility to launch in South Florida, CaliforniaAnd Puerto Rico from 2026. The FAA, for its part, last week finalized a set of rules for eVTOL pilot training and operations, laying the foundation for the development of the technology.