Wolfspeed Exits Bankruptcy With Slimmed Debt, New Shares, and a Fresh Start

Wolfspeed (NYSE: WOLF) officially emerged from Chapter 11 bankruptcy late Monday, completing a sweeping financial restructuring that reshapes its balance sheet, ownership structure, and future trajectory. The announcement triggered heavy volatility in the stock, which surged as much as 23% in premarket trading Tuesday before paring gains. The emergence caps a turbulent stretch for the silicon carbide chipmaker, which filed for Chapter 11 protection in June after years of high debt, rising costs, and pressure to keep pace with the accelerating electric vehicle (EV) and industrial power markets.

The centerpiece of Wolfspeed’s restructuring is a massive debt reduction . The company cut roughly 70% of its obligations, slashing a $6.5 billion load to closer to $2 billion. Annual cash interest expense will decline by around 60%, freeing up liquidity that management says will fund operations and growth. Maturities on the remaining debt have been pushed out to 2030, offering much-needed breathing room. Management described the deal as “transformative” and highlighted that Wolfspeed now has ample resources to continue scaling its vertically integrated 200mm silicon carbide wafer production, which it believes will be central to demand from automakers, industrials, and energy customers.

Shareholders, however, paid a steep price. As part of the plan, Wolfspeed canceled all previously outstanding stock and issued new equity under the same ticker, WOLF. The New York Stock Exchange suspended trading in the old shares, which will be formally delisted on October 10. Existing investors received just 1.3 million shares in the reorganized company, at an exchange ratio of 0.008352 for each old share canceled. With Wolfspeed’s new float set at roughly 25.8 million shares, prior shareholders now hold only 3–5% of the recapitalized business. That sliver could expand if regulatory milestones are achieved, triggering distribution of up to 871,000 additional contingent shares, but even then, old equity holders will remain heavily diluted.

Creditors emerged in far stronger shape. In exchange for agreeing to haircut their claims by billions, creditors now own the vast majority of Wolfspeed’s new equity. This outcome reflects the typical Chapter 11 dynamic: lenders trade debt for ownership, while legacy equity is largely wiped out. Still, Wolfspeed executives emphasized that the restructuring avoided a full liquidation and left all stakeholders—including employees, customers, and vendors—in a better position than would have been possible under a more drawn-out process.

Beyond the capital structure reset, Wolfspeed also reincorporated in Delaware from North Carolina, a common step in major reorganizations aimed at simplifying governance and benefiting from Delaware’s corporate law framework. The company also appointed five new directors to its board, strengthening oversight as it embarks on what management calls a “new era.” CEO Robert Feurle underscored Wolfspeed’s ambition to remain a leader in silicon carbide technologies, citing EV adoption, artificial intelligence power demand, and renewable energy as long-term growth drivers.

Operationally, Wolfspeed insists it is turning a corner. The company now has a fully scaled 200mm silicon carbide wafer facility in Mohawk Valley, New York, which it calls the largest and most advanced in the world. Management believes the plant will provide both cost and scale advantages as the industry shifts from 150mm to 200mm substrates, enabling Wolfspeed to capture rising demand. Feurle stressed that Wolfspeed is entering this period with “much improved financial stability” and “a renewed commitment to growth and innovation.” The company aims to fund expansion through internally generated free cash flow, rather than relying on risky debt issuance.

Still, risks remain. Wolfspeed’s revenue base has been under pressure, and the company has struggled with losses even as it invests heavily in capacity. Analysts warn that while the debt cut provides relief, Wolfspeed must execute on its product roadmap and secure new customer wins in EVs and industrial markets to justify its valuation. The dilution of old shareholders also serves as a cautionary tale about the dangers of investing in distressed companies during bankruptcy proceedings.

For now, the stock reaction reflects optimism that the worst is behind Wolfspeed. After being battered earlier this year and trading near historic lows, shares roared back as the restructuring plan cleared court hurdles in September and gained momentum with Monday’s emergence. The fresh 25.8 million-share float will likely mean elevated volatility as investors recalibrate valuations based on the slimmer balance sheet and smaller equity base. Trading on Tuesday was briefly halted due to sharp swings, with the stock at one point up more than 20% before easing.

The next chapter for Wolfspeed will depend on whether the company can translate its cleaner balance sheet and state-of-the-art fab into consistent growth and profitability. With the semiconductor industry in flux, and EV and renewable demand accelerating, Wolfspeed is betting that silicon carbide will remain indispensable in next-generation power systems. Creditors now own the lion’s share of that bet, while legacy shareholders are left with only a fraction of what they once held.

In the end, Wolfspeed’s story mirrors many Chapter 11 restructurings: creditors take control, old equity is nearly wiped out, and the company lives on to fight another day—leaner, chastened, but potentially positioned for a comeback. Investors will be watching closely to see if Wolfspeed can seize its second chance.