Following unsuccessful attempts to secure additional funds amidst sluggish sales over consecutive quarters, pioneering Swedish textile recycler Renewcell announced plans to declare bankruptcy.
Despite expectations to report its full fiscal year earnings, Renewcell later postponed the release amid challenging negotiations with its major shareholders, including H&M and Girindus, along with existing lenders such as BNP Paribas and Nordea. The company failed to attract new investors or devise a viable solution to ensure its ongoing operations.
Renewcell specialises in producing Circulose, a revolutionary textile pulp derived from chemically recycled cotton waste, and operates one of the world's pioneering commercial-scale textile-to-textile recycling facilities.
Renewcell struggled to secure sufficient orders, despite Inditex's commitment to purchase 2,000 tons of material blend made with Circulose through Tangshan Sanyou.
Former CEO Patrik Lundström's departure and the subsequent appointment of Magnus Håkansson as interim CEO marked a transition period aimed at revitalising sales. However, slow sales persisted, prompting renewed appeals to brands to support Circulose adoption.
Renewcell's predicament underscores broader challenges within the fashion industry, where circularity initiatives are hailed as solutions to waste problems, yet implementation remains a hurdle.
H&M's minority stake in Renewcell since 2017 and its endorsement of Circulose material showcased initial optimism. However, despite the full-scale factory's launch in 2022 and ambitious production targets for the future, Renewcell struggled to meet demand and achieve financial viability.
Its bankruptcy announcement reflects the sobering challenges of aligning sustainability aspirations with commercial viability in the fast-paced fashion industry, signaling a setback in the journey towards a circular economy for fashion.
