Wolfspeed: 91-Day Prepack Cuts $4.6B in Chapter 11

Wolfspeed, Inc., the Durham-based silicon carbide semiconductor manufacturer, filed for Chapter 11 bankruptcy protection on June 30, 2025, in the United States Bankruptcy Court for the Southern District of Texas. The filing implements a prepackaged restructuring supported by more than 97% of senior secured noteholders and approximately 67% of convertible noteholders, targeting a roughly 70% debt reduction. The company emerged from bankruptcy on September 29, 2025—a 91-day prepackaged case that eliminated approximately $4.6 billion in debt.

Debtor(s)	Wolfspeed, Inc. (+ affiliates)
Case Number	25-90163
Court	U.S. Bankruptcy Court, Southern District of Texas
Judge	Hon. Christopher M. Lopez
Petition Date	June 30, 2025
Emergence Date	September 29, 2025
Pre-Petition Debt	~$6.7 billion
Debt Eliminated	~$4.6 billion (70% reduction)
Post-Emergence Debt	~$2.0 billion
Annual Interest Reduction	~$240 million (60% reduction)
RSA Date	June 22, 2025
RSA Support	97% senior secured; 67% convertible
New Financing	$275 million (from existing creditors)
Enterprise Value	$2.35B–$2.85B (midpoint $2.6B)
Equity Value	$850M–$1.35B (midpoint $1.1B)
Unsecured Recovery	100%
Existing Equity Recovery	3–5%
Industry	Silicon Carbide Semiconductors
Headquarters	Durham, North Carolina
Employees (Post-Layoffs)	~4,430 (after 570 laid off)
Lead Counsel	Latham & Watkins LLP
Claims Agent	Epiq Corporate Restructuring, LLC
Financial Advisor	FTI Consulting
Investment Banker	Perella Weinberg Partners

Company History and Origins

Wolfspeed's roots trace back to 1987, when Cree Research Inc. was founded in Durham, North Carolina by six graduates of North Carolina State University. The company emerged from the laboratory of Robert Davis, an emeritus professor in Materials Science & Engineering who had received Office of Naval Research funding to study silicon carbide for microwave applications.

The company achieved several industry firsts: introducing the first blue light-emitting diode in 1989, releasing the first commercial silicon carbide wafer in 1991, and completing its initial public offering in 1993. For decades, Cree was synonymous with LED lighting technology, but strategic shifts would transform the company's focus.

Beginning in 2019, Cree divested its lighting products division, followed by the sale of its LED business to SMART Global Holdings for up to $300 million in March 2021. The company sold its radio frequency business in 2023. In October 2021, the company officially rebranded as Wolfspeed, Inc., signaling its exclusive focus on silicon carbide and gallium nitride power semiconductors. Today, Wolfspeed operates as the largest pure-play provider of SiC substrates in the world and the sole fully vertically integrated manufacturer of 200mm silicon carbide at scale.

Financial Deterioration and Market Challenges

In its SEC 10-Q, the company recorded a net loss of $939.9 million in the nine months ended March 30, 2025 (compared to $689.3 million in the prior year period), while revenue declined from $606.5 million to $560.6 million. The period coincided with weaker EV and industrial demand and pricing pressure.

These financial pressures were exacerbated by the company's debt burden. As of March 30, 2025, Wolfspeed carried approximately $6.7 billion in total debt, including approximately $3.1 billion in convertible notes and a $2.127 billion customer refundable deposit from Renesas Electronics under a 10-year supply agreement. Technical publications noted Wolfspeed's debt position, with annual cash interest expense approaching $400 million and negative adjusted EBITDA.

Prior to the filing, Wolfspeed implemented cost reduction initiatives. In November 2024, the company laid off approximately 20% of its workforce and closed multiple facilities to save approximately $200 million annually. Additional layoffs in March 2025 followed as the company sought to reduce operating costs and preserve liquidity. Total workforce reductions reached approximately 570 employees by March 2025.

In January 2025, Wolfspeed undertook an "at the market" equity offering, selling 27,793,535 shares for gross proceeds of approximately $200 million. While this provided additional liquidity, management recognized it was insufficient to resolve the company's capital structure challenges.

The company engaged JP Morgan and Perella Weinberg Partners as investment bankers in February 2025, along with Latham & Watkins as restructuring counsel. In March 2025, Wolfspeed pursued a "public-style" out-of-court exchange transaction targeting the 2026 Convertible Notes maturity. When this process concluded without a transaction on March 28, 2025, the company's stock price fell approximately 50% to $2.59 per share, leaving a market capitalization of roughly $400 million. The company then pivoted to in-court restructuring negotiations that culminated in the June 2025 RSA.

Manufacturing Footprint and Capital Investments

Wolfspeed undertook capital expenditures to build next-generation manufacturing capacity. The company operates a network of facilities designed for 200mm silicon carbide wafers.

The Mohawk Valley Fab in Marcy, New York represents a $1.2 billion joint investment between Wolfspeed and New York State, located on the SUNY Polytechnic Institute campus in Oneida County. Governor Kathy Hochul announced the facility as the world's first, largest, and only 200mm silicon carbide fabrication facility—fully automated and automotive-qualified. Construction began in 2019 and operations commenced in April 2022, with commitments to create over 600 jobs within eight years.

The Siler City Facility in North Carolina would become the world's largest 200mm SiC materials factory, a 2-million-square-foot complex expected to increase materials production capacity by more than ten-fold. The facility received its certificate of occupancy and began operations in June 2024.

A planned $3 billion semiconductor plant in Germany, announced in February 2023 with EU subsidies, was delayed in June 2024 and placed on indefinite hold in October 2024 as Wolfspeed confronted its liquidity crisis.

CHIPS Act Funding and Government Support

On October 15, 2024, the U.S. Department of Commerce and Wolfspeed signed a non-binding preliminary memorandum of terms for up to $750 million in proposed CHIPS Act direct funding. The funding would support construction at Siler City and expansion of the Mohawk Valley facility. The Commerce Department projected the investments would create over 2,000 manufacturing jobs and 3,000 construction jobs, with expected five-fold increases in SiC device output and ten-fold increases in 200mm materials capacity.

The announcement carried political support. Senator Chuck Schumer championed the preliminary award, emphasizing Wolfspeed's role in reducing American dependence on foreign semiconductor supply chains. The Mohawk Valley investment was part of New York's semiconductor manufacturing strategy, with Schumer noting the facility's importance to national security and clean energy goals.

Simultaneously, Wolfspeed announced $750 million in additional financing from an investment consortium led by Apollo Global Management and including The Baupost Group, Fidelity Management & Research Company, and Capital Group. Combined with expected $1 billion in Section 48D advanced manufacturing tax credits, the company anticipated access to up to $2.5 billion in total capital.

The Section 48D tax credit. Distinct from direct CHIPS Act grants, the CHIPS Act also established Section 48D of the Internal Revenue Code—the Advanced Manufacturing Investment Credit (AMIC). This provision offers a 25% investment tax credit for qualified investments in semiconductor manufacturing facilities, with credits either applied against tax liability or received as direct payments from the IRS. Wolfspeed's capital expenditures at Mohawk Valley and Siler City qualified for these credits, resulting in the $698.6 million tax refund the company received in December 2025—an outcome that materialized despite the direct grant never finalizing.

However, the preliminary CHIPS Act direct funding remained contingent on balance-sheet conditions that Wolfspeed could not satisfy, including requirements to refinance convertible notes, defer interest payments under the Renesas agreement, raise new equity, and complete operational milestones. The preliminary memorandum of terms never progressed to a final award before the bankruptcy filing.

Pre-Packaged Restructuring Plan

The prepackaged plan contemplates an approximately 70% reduction in total debt—about $4.6 billion—bringing debt down from roughly $6.7 billion to approximately $2.118 billion. Annual cash interest expense was reduced by approximately 60%, from $400 million to approximately $160 million, with debt maturities extended to 2030.

Apollo-led creditor consortium. The restructuring was driven by an Apollo-led creditor group holding approximately $1.5 billion in senior secured notes—the first-in-line creditors who would control the reorganized company. Apollo's involvement dated to October 2024, when the investment manager led the $750 million secured financing alongside The Baupost Group, Fidelity Management & Research Company, and Capital Group. This consortium moved from providing financing to supporting the restructuring. By June 2025, negotiations between Wolfspeed management and the senior secured noteholder group had produced the Restructuring Support Agreement, with Apollo positioned to take effective control through the equity conversion.

Latham & Watkins served as lead restructuring counsel, guiding the company through the prepackaged process. The restructuring provided approximately $275 million in new financing from existing creditors to support emergence.

The plan implemented a debt-to-equity conversion transferring ownership primarily to creditors. Ropes & Gray represented holders of $2.1 billion of convertible notes in the restructuring, which contemplated exchange of $5.2 billion of existing convertible notes and Renesas loans for $500 million of new notes and 95% of new common equity.

Existing shareholders faced dilution, receiving approximately 3-5% of reorganized equity—a recovery characterized as a "gift" from consenting creditors rather than an entitlement under absolute priority.

The Disclosure Statement's liquidation analysis demonstrated the Plan's superiority over Chapter 7 liquidation, satisfying the "best interests" test under Section 1129(a)(7). Estimated gross liquidation proceeds ranged from $1.51 billion (low scenario) to $2.91 billion (high scenario).

The analysis showed that convertible noteholders would recover 25-30% under the plan versus a maximum of 3.8% in the best-case liquidation scenario, while general unsecured creditors would recover 100% under the plan.

Case Timeline and Confirmation

The bankruptcy proceeded on a 91-day timeline:

Note: Wolfspeed Texas LLC case (25-90162) remains open for residual administrative matters including claims reconciliation and cure disputes.

The plan was confirmed under Section 1129(b) cramdown provisions after Class 10 (existing equity) was deemed to reject. The court found the plan did not discriminate unfairly and was fair and equitable with respect to the rejecting class.

On September 8, 2025, the court approved an emergency motion authorizing the private sale of Wolfspeed's equity stake in MACOM Technology Solutions Holdings, Inc. Under the approved terms, the debtors retained the first $60.8 million of sale proceeds, with any remaining amounts applied to redemption of Senior Secured Notes. The court found the sale maximized value and constituted fair consideration.

U.S. Trustee Objection and Third-Party Releases

On August 21, 2025, the U.S. Trustee filed an objection challenging the plan's third-party release provisions, citing the Supreme Court's 2024 decision in Harrington v. Purdue Pharma L.P. The objection raised several legal arguments: first, that the Bankruptcy Code does not authorize nonconsensual releases of claims against non-debtor third parties; second, that silence or failure to opt out does not constitute affirmative consent under state contract law; and third, that permanent injunction and gatekeeper provisions violated Fifth Circuit precedent in Highland Capital Management.

The court overruled the objection, finding the releases to be consensual rather than nonconsensual. The opt-out process included over 200 holders who affirmatively submitted opt-out forms. The court found the gatekeeping provisions acceptable as a procedural check to ensure injunctions do not run afoul of the release boundaries. The ruling concluded that no non-consensual releases were present, consistent with the Fifth Circuit's interpretation of the Purdue decision distinguishing consensual releases from the impermissible nonconsensual releases at issue in that case.

Additional Contested Matters

Beyond the U.S. Trustee objection, several disputes required resolution during the case:

MACOM Share Sale Proceeds Allocation: A disagreement arose between the Debtors and the Ad Hoc Senior Secured Noteholder Group regarding whether proceeds from the MACOM share sale required a mandatory paydown under the Senior Secured Notes Indenture. The parties resolved this dispute prior to the sale motion hearing, with the approved terms allocating the first $60.8 million to the Debtors and any remaining amounts applied to Senior Secured Notes redemption.

SDA Construction Contract Dispute: Exyte U.S., Inc. (SDA), a major contractor for Wolfspeed's manufacturing facilities, disputed cure amounts for assumed executory contracts. The parties pursued consensual resolution through the confirmation process, with SDA retaining its rights to arbitration under the underlying contracts.

Impact on Key Business Relationships

Renesas Electronics, a key customer and financing counterparty, expects to record a loss of approximately ¥250 billion (roughly $1.7 billion) related to its Wolfspeed exposure and the conversion of its refundable deposit under the restructuring, with further detail in the Renesas newsroom. The announcement triggered a decline in Renesas shares.

Wolfspeed emphasized continued, normal operations during restructuring. The company filed an All-Trade Motion ensuring vendors would be unimpaired with ordinary-course payments continuing. General unsecured creditors received 100% recovery under the plan.

Silicon Carbide Market Dynamics

According to McKinsey analysis, the industry is navigating a transition from 6-inch to 8-inch (200mm) wafers, with material uptake beginning around 2024-2025 and 50% market penetration expected by 2030. McKinsey notes that Wolfspeed leads the 8-inch wafer transition.

However, a temporary slowdown in EV sales during 2024 delayed SiC demand growth. The automotive and mobility segment retains approximately 70% of SiC demand, making semiconductor manufacturers highly sensitive to electric vehicle adoption rates.

Chinese competition and pricing pressure. The global SiC substrate market experienced a 9% revenue decline in 2024. According to TrendForce data, Wolfspeed retained its position as the leading SiC substrate supplier with 33.7% market share in 2024—down from 35.2% in 2023. Chinese competitors have gained market share: TanKeBlue now holds 17.3% market share (up from 10% in 2021), while SICC commands 17.1%. Combined, Chinese manufacturers now control approximately 40% of the global SiC market.

Industry analysts report that Chinese-manufactured 6-inch SiC wafers sell for approximately $500, compared to $1,500 or more for comparable wafers from Western producers like Wolfspeed.

Wolfspeed is the only high-volume producer of 8-inch (200mm) SiC wafers. The transition to 200mm substrates yields roughly 70% more die per wafer. TrendForce projects 8-inch SiC wafers will exceed 20% of total industry shipments by 2030.

Post-Emergence Capital Structure

Wolfspeed emerged with a self-funded business plan supported by free cash flow generation, as the sole vertically-integrated 200mm SiC manufacturer at scale. Industry observers characterized the emergence as a new era for the company, noting its streamlined capital structure and manufacturing-focused strategy.

The Disclosure Statement's valuation analysis estimated the reorganized company's enterprise value at $2.35 billion to $2.85 billion (midpoint $2.6 billion), with an implied equity value of $850 million to $1.35 billion (midpoint $1.1 billion) based on pro forma net debt of approximately $1.5 billion.

The reorganized company's equity is distributed among:

• Convertible Noteholders: 56.3% of new common stock
• Renesas: 38.7% of new common stock (plus warrants)
• Existing Equity Holders: 3-5% of new common stock
• Management Incentive Plan: 10% reserved
• Long-Term Incentive Plan: Up to 5% reserved

A new board of directors was established through a Selection Committee comprising one existing Wolfspeed director, the existing CEO, and three individuals designated by the Ad Hoc Convertible Noteholder Group. Officers serving immediately before the effective date continued as initial officers of the reorganized company. Renesas received the right to appoint one board member pending regulatory approval, reflecting its post-emergence equity stake. The company intends to seek NYSE or NASDAQ listing for its new common stock, maintaining public company status despite the ownership transition.

Post-Emergence Status and Recent Developments

Wolfspeed's post-emergence cash position increased in late 2025. On December 5, 2025, the company received a $698.6 million tax refund from the IRS under Section 48D of the Internal Revenue Code—the Advanced Manufacturing Investment Credit (AMIC) component of the CHIPS Act. This refund, representing approximately 25% of Wolfspeed's 2024 qualifying capital expenditures, brought the company's cash balance to approximately $1.5 billion. Management allocated $192.2 million of these proceeds to debt repayment, including $175 million in principal reduction on the senior secured term loan, with the remainder applied to accrued interest.

Operational restructuring. Wolfspeed announced plans to close its legacy Durham, North Carolina 150mm wafer fabrication facility by year-end 2025. This closure completes the company's transition from 150mm to 200mm silicon carbide production, consolidating manufacturing at the Mohawk Valley and Siler City facilities.

Board reconstitution. In September 2025, Wolfspeed appointed five new directors to its reconstituted board following emergence: Anthony Abate (appointed Chairman), Brian Bokan, Nicholas Hou, Kenneth Musser, and Manuel Bolisay. The appointments followed the ownership transition to creditors. Six directors departed in connection with the restructuring: Thomas Werner, Duy-Loan T. Le, Darren Jackson, Stacy Smith, Ann Brennan-Godbolt, and John Replogle.

The tax refund and debt reduction increased cash and reduced debt. With debt maturities extended to 2030 and annual interest expense reduced by 60%, the company continues as the only vertically-integrated 200mm silicon carbide manufacturer at scale.

Legal and Professional Advisors

Wolfspeed retained restructuring advisors for its prepackaged case. Final fee applications filed with the court detail professional costs for the 91-day case.

Total professional fees exceeded $31.6 million for the 91-day prepackaged case. The Debtors also retained numerous Ordinary Course Professionals (OCPs) with monthly compensation caps ranging from $10,000 to $1,000,000, including PwC LLP, Baker McKenzie, Baker Hostetler, DLA Piper, Fenwick & West, Kilpatrick Townsend, Myers Bigel, and Wilmer Hale, among others.

The case proceeded without traditional DIP financing. The Debtors were authorized to use cash collateral with adequate protection to prepetition secured parties.

Katten Muchin Rosenman LLP was retained as special counsel to investigate certain matters on behalf of a Special Investigation Committee. The scope and conclusions of this investigation were not disclosed in public filings.

Frequently Asked Questions

What caused Wolfspeed's bankruptcy filing? Wolfspeed's Chapter 11 filing resulted from unsustainable debt levels—approximately $6.7 billion including $3.1 billion in convertible notes and a $2.127 billion Renesas deposit—combined with declining revenue, nearly $1 billion in annual losses, and $400 million in annual cash interest expense against negative EBITDA.

How much debt did Wolfspeed eliminate in bankruptcy? The prepackaged restructuring eliminated approximately $4.6 billion in debt, representing a 70% reduction. Total debt declined from roughly $6.7 billion to approximately $2 billion post-emergence.

How long was Wolfspeed in bankruptcy? Wolfspeed was in Chapter 11 for 91 days, filing on June 30, 2025 and emerging on September 29, 2025. The accelerated timeline reflects the prepackaged nature of the case with creditor support secured before filing.

What happened to Wolfspeed's existing shareholders? Existing equity holders received approximately 3–5% of the reorganized company's stock—characterized in court filings as a "gift" from consenting creditors rather than an entitlement under absolute priority principles.

Did Wolfspeed receive CHIPS Act funding before bankruptcy? Wolfspeed had a preliminary memorandum of terms with the Commerce Department for up to $750 million in proposed CHIPS Act funding, but the award never finalized before bankruptcy. The funding was contingent on balance-sheet conditions Wolfspeed could not satisfy.

What was Renesas's role in the restructuring? Renesas Electronics held a $2.127 billion refundable customer deposit under a 10-year supply agreement. In the restructuring, Renesas converted this exposure into new notes, warrants, and a 38.7% equity stake in the reorganized company. Renesas expects to record a loss of approximately ¥250 billion (~$1.7 billion).

How were unsecured creditors treated? General unsecured creditors received 100% recovery under the plan. Wolfspeed filed an All-Trade Motion ensuring vendors would continue receiving ordinary-course payments during the case.

What is Wolfspeed's post-emergence capital structure? Wolfspeed emerged with approximately $2 billion in debt, annual interest expense reduced to approximately $160 million (down from $400 million), and debt maturities extended to 2030. The company also received $275 million in new financing from existing creditors.

Who owns Wolfspeed after bankruptcy? Post-emergence ownership includes convertible noteholders (56.3%), Renesas (38.7%), existing equity holders (3–5%), with 10% reserved for management incentive plans and up to 5% for long-term incentive plans.

What was the U.S. Trustee objection about? The U.S. Trustee objected to the plan's third-party release provisions, citing the Supreme Court's Purdue Pharma decision. The court overruled the objection, finding the releases were consensual (with over 200 holders affirmatively submitting opt-out forms) rather than the nonconsensual releases prohibited by Purdue.

Who is the claims agent for Wolfspeed's bankruptcy? Epiq Corporate Restructuring, LLC served as the claims and noticing agent for the Wolfspeed bankruptcy cases (Case No. 25-90163, jointly administered). The cases were filed in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, before Judge Christopher M. Lopez. Wolfspeed emerged from Chapter 11 on September 29, 2025, and the lead case was closed by Final Decree on December 29, 2025.

For ongoing restructuring coverage, visit ElevenFlo's bankruptcy blog.