GreenBiz writes that the Swedish company failed to secure long-term financing last December and after almost 12 years of business and 10.6 million USD in venture capital, officials filed for bankruptcy in Stockholm.

Using scrap cotton from the production of jeans and other fashion items to create recycled Circulose, Renewcell's own material, the company's proposed solution became a favorite among industry members, such as Zara and H&M, who agreed to purchase 18.000 tons of the material between 2024 and 2025.

The product, however, saw multiple delays in production last summer, as the quality still wasn't up to the expectations, which meant that no Circulose was sold in November of 2023.

Michael Berg, chairman of Renewcell’s board of directors, said that "this is a sad day for the environment, our employees, our shareholders, and our other stakeholders, and it is a testament to the lack of leadership and necessary pace of change in the fashion industry."

Some industry members fear that the failure might deter other companies from trying to repurpose old textile fibers, as these are difficult to integrate into the longer threads required for production.

Ashley Holding, principal consultant at Circuvate in Frankfurt, Germany, said that "is this the end for circular fashion? Absolutely not. Innovators will surely learn from Renewcell's mistakes. There will be winners, but also some losers."

This is because in 2018 alone, the fashion industry was responsible for causing 4% of the world's greenhouse gas emissions and after fashion items are worn, two-thirds of them reach landfills or incinerators.

Renewcell's initial plan was to recycle 1.4 billion t-shirts per year by 2030.

There is hope for the company's factory, however, as Renewcell Chief Commercial Officer Tricia Carey said that the company wants to sell the facility to interested companies as there is enough fiber and pulp for the coming two to three years.

Burak Orhan Arifioglu, a board member of yarn seller Karacasu Tekstil in Turkey, is one of the people trying to save the company, saying that "Renewcell had no difficulties with fiber quality. In fact, I think it is probably the best I've ever seen in [the] textile market."

As the fashion industry evolves to become more sustainable, as per the efforts of European officials, companies will also look to introduce new products on the market that can contribute to the circular economy. Big companies might not be allowed to pile up returned fashion items anymore, but rather recycle or donate them.