Wolfspeed Inc (NYSE:WOLF) shares plunged almost 70% after the Wall Street Journal (WSJ) revealed the chipmaker is preparing to file for Chapter 11 bankruptcy within weeks due to its inability to manage its substantial debt load, which totals around $6.5 billion.
According to the report, which cited sources with knowledge of the matter, the company has rejected multiple out-of-court debt restructuring proposals from creditors and is now focusing on a prepackaged bankruptcy plan that would have the support of a majority of its creditors.
This plan aims to reorganize Wolfspeed’s obligations under court supervision to address its financial challenges, according to the WSJ.
The report highlighted that Wolfspeed faces a $575 million balloon payment due to convertible noteholders in May 2026, and other convertible notes maturing in 2028 and 2029, which complicate its refinancing efforts. To qualify for up to $750 million in CHIPS Act funding, Wolfspeed would need to successfully refinance these debts.
The report comes after months of operational and financial challenges for Wolfspeed, including disappointing earnings, loss of key customers, and potential loss of significant government grants and tax incentives.
Shares of Wolfspeed traded down 69% at $0.97 in the early afternoon on Wednesday. The stock is down more than 85% so far in 2025.