Applications for self-administration proceedings with respect to Sono Group N.V. and Sono Motors GmbH under the German Insolvency Act - Seite 2

Following the filing of their respective applications, Sono Group N.V. and Sono Motors GmbH are generally prohibited from repaying any pre-application debt. Furthermore, if and when the self-administration proceedings are admitted by the court on a preliminary basis, creditors will be prohibited from foreclosing against the companies on any claims they may have. In addition, subject to certain limited exceptions, Sono Group N.V. will lose control of its sole subsidiary Sono Motors GmbH. We are in the process of analyzing the potential accounting and financial reporting implications of the applications for self-administration proceedings, including with respect to the ability of Sono Group N.V. to continue to consolidate Sono Motors GmbH while such proceedings are ongoing.

With the help of external advisors, Sono Group N.V. and Sono Motors GmbH are in the process of each preparing a draft restructuring plan to be submitted to the court for approval by the respective company’s creditors and for confirmation by the court in the context of the respective proceeding. The draft restructuring plans will in each case set out how the respective company intends to restructure its debt and to procure the inflow of new money.

Even if the openings of the respective proceedings are permitted by the court, the successful conclusion of the respective proceedings and Sono Group N.V.’s and Sono Motors GmbH’s exits from the respective proceedings remain subject to a number of contingencies and risks, including, but not limited to, (i) whether the companies are able to identify and successfully access sufficient sources of liquidity to enable a restructuring, (ii) whether creditors in each case approve the respective restructuring plan with the required majorities, and (iii) whether the court confirms the restructuring plan in each case. Should the self-administration proceedings applied for by Sono Group N.V. and Sono Motors GmbH, respectively, not be approved or should the respective draft restructuring plan fail to be approved by the respective company’s creditors or confirmed by the court, the respective company would become subject to regular insolvency proceedings, which could involve its liquidation.