Recycled fiber specialist Renewcell, of which H&M is a shareholder, files for bankruptcy

The Swedish company Renewcell, of which the H&M group is one of the main shareholders, announced on February 25 that it would declare bankruptcy before the Stockholm court. Renewcell was founded in 2012 and specializes in recycling clothing to produce new fibres, particularly a yarn called Circulose, which is used by major fashion groups around the world. In particular H&M, but also Bestseller, Tommy Hilfiger and Ganni.

Renewcell management says in a statement that the decision was made because it was unable to raise sufficient liquidity to implement the strategic restructuring announced in November 2023. The company claims to have “carried out advanced negotiations with its two main shareholders, H&M and Girindus, with existing lenders BNP Paribas, the European Investment Bank, Finnvera, Nordea and AB Svensk Exportkredit, as well as potential new investors for long-term financing solutions.” But it was in vain.

The company blames the slow clothing market. “This is a sad day for the environment, for our employees, for our shareholders and other stakeholders. It is a testament to the fashion industry's lack of leadership and adaptation to change,” said Renewcell president Michael Berg.

Last November, the company was already pointing out the slowness of brands in turning to recycled fibers and stated that it was experiencing a drop in orders from clothing manufacturers that dedicated only a small part of their offer to more sustainable materials. Renewcell had opened a dedicated recycling plant in Sundsvall in 2022, aiming to achieve high capacity and profitability, something it has not achieved.

Renewcell had also partnered with other fashion industry specialists, notably Austrian wood pulp-based materials specialist Lenzing. Lenzing announced in 2022 that he had ordered between 80,000 and 100,000 tons of Circulose over five years to supply his own production of Tencel and Ecovero fibers.