Wolfspeed, the semiconductor firm backed by Apollo Global Management, is nearing a restructuring agreement with creditors that would see the company file for a prepackaged Chapter 11 bankruptcy, according to a report by Bloomberg citing sources familiar with the matter.
The anticipated deal – expected to be announced imminently – would allow Wolfspeed to restructure billions in liabilities through a short stay in bankruptcy, under a plan negotiated in advance with its largest creditors, including Apollo.
The restructuring support agreement (RSA) will enable creditors to vote on the plan prior to a formal court filing, streamlining the process and reducing costs associated with a prolonged insolvency.
Shares in Wolfspeed plunged 30% on Wednesday to close at $0.87, marking a two-decade low.
Notably, the proposed restructuring plan provides for full recovery to suppliers and unsecured creditors, while existing equity holders may retain up to 5% of the reorganised company – a rare outcome in Chapter 11 proceedings. Should creditor support for the RSA fall short, Wolfspeed is expected to pursue a more conventional bankruptcy, in which shareholders would likely be wiped out, one source noted.
Neither Wolfspeed nor Apollo responded to requests for comment.
Headquartered in Durham, North Carolina, Wolfspeed is a key producer of silicon carbide-based semiconductors used in electric vehicles and power applications. The company has faced persistent manufacturing challenges at its flagship wafer facility, coupled with mounting debt and a deteriorating equity position.
In 2023, Wolfspeed secured a $750m federal grant under the Chips and Science Act to bolster domestic chip production. However, with the incoming Trump administration reviewing past grant commitments, Wolfspeed has yet to receive the full allocation and is currently renegotiating the terms.
Japanese semiconductor firm Renesas Electronics Corp – both a key customer and one of Wolfspeed’s largest creditors – paid a $2bn deposit as part of a long-term supply agreement and has been actively involved in the restructuring discussions alongside Apollo, the company disclosed earlier this year.
By March, Wolfspeed had failed to refinance $575m in bonds maturing in 2026. On 9 May, the company confirmed it had retained advisors to explore liability management alternatives, including a potential court-supervised process. According to sources, a significant majority of the firm’s bondholders are now aligned behind the draft RSA.
Apollo has been a core financier of Wolfspeed since at least 2023, having led a lender group that extended up to $2bn in capital to the chipmaker. The private equity giant also partnered with Baupost Group and Fidelity Management last year to provide $750m in interim financing.
