H&M-backed textile recycler Renewcell files for bankruptcy

Swedish textile-to-textile recycling company Renewcell, behind the Circulose fibre and backed by fashion chain H&M, has filed for bankruptcy.

In a statement, the textile innovator said it had filed for bankruptcy at the Stockholm District Court as it "has not been able to secure sufficient financing".

At the end of 2023, the company reduced its production capacity due to a lack of sales, and in January 2024, it announced it was cutting its workforce by 25 percent as part of a strategic restructuring.

As part of the review, Renewcell attempted to secure new funding and had negotiations with its two largest shareholders, H&M and material firm Girindus, as well as its existing lenders BNP Paribas, European Investment Bank, Finnvera, Nordea, AB Svensk Exportkredit, and potential new investors and other stakeholders regarding long-term financing options.

However, these discussions have not resulted in a solution to provide the company with "the necessary liquidity and capital to ensure its operations going forward", it added.

Circular fibre producer Renewcell files for bankruptcy

Michael Berg, chairman of Renewcell, said: "I regret to inform that we have been forced to take 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 efforts into 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 both 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.”

Renewcell produces Circulose, an innovative textile pulp made from cotton waste, such as worn-out cotton clothes and production scraps, which are then recycled and transformed in a chemical process.

In October, Zara’s parent company Inditex vowed to acquire 2,000 tons of material blend made with Renewcell’s Circulose through Hong Kong-based fibre producer Tangshan Sanyou, which has an existing offtake agreement with Renewcell.