Desktop Metal files for bankruptcy protection

In case you’re just tuning in, there is a long saga of consolidation in the additive manufacturing space. Nano Dimension tried to buy Desktop Metal and Markforged and ultimately succeeded, but has been rebuffed by Stratasys several times since 2023. All of this will-they-won’t-they did serious harm to each of the players, and earlier this week, Desktop Metal filed for bankruptcy protection in the US, even though it is a Nano Dimension subsidiary.

Why? And how is this possible? It is a subsidiary, after all: shouldn’t Nano be responsible for any debts?

Apparently not. Everyone involved is careful to point out that Desktop Metal’s board sees the bankruptcy filing as a way to deal with poor choices made by prior Desktop Metal management. And Nano quickly added, in essence, “This is good since it lets us safeguard our cash,” which, to me, is also a way of saying “not our problem.”

And why might that be? Let’s recap:

• Nano Dimension and Desktop Metal agreed to merge in July 2024, with the deal contingent upon the usual regulatory approvals.
• While that process was underway, Desktop Metal’s financial struggles became more apparent, as the company continued to post losses.
• Then, in December 2024, while still waiting for regulatory approvals, Desktop Metal sued Nano, saying that Nano Dimension failed to use “reasonable best efforts” to obtain that approval and delay the close of the merger. Nano, of course, didn’t agree and said that Desktop Metal was “breaching interim operating covenants,” including stretching payables and accelerating receivables to bolster its cash position.
• The court ultimately sided with Desktop Metal in March 2025, saying that Nano had breached the merger agreement by not using its best efforts to secure regulatory approval and ordered Nano to complete the merger …
• Which it did last April. 

All caught up? Simply put, Nano no longer wanted Desktop Metal at the agreed-upon price but was stuck with it. Not a happy start to a relationship.

The acquisition didn’t mean Desktop Metal’s financial problems went away. In 2017, Desktop Metal took out $115 million in loans. These were due to mature in 2026, but as I understand it, the acquisition by Nano triggered a requirement that someone had to repurchase the notes earlier, at their principal value plus accrued interest. Desktop Metal didn’t have the cash (only $30 million as of their last SEC filing, for September 2024) for this and other outstanding bills. 

Hence, the bankruptcy filing. Desktop Metal says it wants the court’s protection as it figures out what to do next. This will likely include the sale of subsidiaries like ExOne, with one news outlet saying a sale could be announced as early as tomorrow.

One weird bit (who am I kidding? It’s all weird): The law firm that helped Desktop Metal force the acquisition says it hasn’t been paid the $30 million it’s owed. That bill is an unsecured debt that could be reduced or wiped out as part of Desktop Metal’s restructuring. The lawyers who won the court case for Desktop Metal and made the deal go ahead might not get paid. 

Why am I telling you all of this? In part because it’s interesting. The only ones who (might) make money out of this are the lawyers. Nano has a subsidiary it doesn’t, after all, want. Desktop Metal was once a high-flyer in additive manufacturing. It acquired other early entrants like ExOne and EnvisionTEC to save them and expand its market presence. However, it did so by taking on a lot of debt, which ultimately led to this mess with Nano.

But also because I have to wonder about the due diligence Nano did on Desktop Metal. Yes, Nano’s former CEO might have been a bit acquisition-mad. Still, someone should have done thorough investigations of the target companies. Nano’s new management team has inherited quite a mess.

Finally, this is a bit like watching a car gently skid on ice. You know it’s gonna hit, you can’t do anything about it, you can’t take your eyes away.

Bottom line: if you’re involved in any deal, do your homework. Know what you’re getting into. Talk to as many people as you can to fully understand all aspects of the agreement. 

And, I guess, don’t underestimate how hard it is to go from leading-edge technology to mass commercialization of anything. Additive has yet to fulfill its potential, and it is unclear whether Desktop Metal will be a part of that.