Renewcell Files for Bankruptcy

The Swedish textile recycler filed for bankruptcy on February 25th after failing to secure enough long-term funding to continue operations. Last November, Renewcell reported lower than expected demand for its products, and the USD 10 million raised last December were insufficient to save the company.

Unsurprisingly, this is a substantial blow to the sustainability movement in fashion. Renewcell recycled used cotton textiles and turned them into “into a feedstock for yarns like viscose and lyocell”, also known as Ciruclose. Renewcell was a pioneer in commercial textile-to-textile recycling and had one of the first industrial recycling plants in the world.

However, pricing proved to be an unsurmountable challenge for the Swedish company. Few brands, and even fewer consumers, are willing the pay the premium on sustainibility. Crispin Argento, MD for The Sourcery, summarized the issue as a lack of honesty from brands, vendors, and even consumers in the LinkedIn post below:

Renewcell in fact called out brands for their greenwashing activities and pushed them to place orders with them. Prior to declaring bankruptcy, Renewcell sold about 6,500 tons of Circulose, and netted sales in Q3 for EUR 7.23 million, slightly more than half of their break-even point. More importantly, only 6.31% of October orders were actually delivered to customers, and whilst purchase orders from H&M and Inditex were helpful, they were clearly not enough to keep the textile recycler afloat.