Wolfspeed Stock Surges. How the Chip Maker Plans to Exit Bankruptcy.

Wolfspeed filed for Chapter 11 bankruptcy at the end of June in an effort to restructure its debt. (AFP via Getty Images)

Wolfspeed stock soared on Tuesday after the beleaguered semiconductor company said its plan to reorganize the business had been approved in bankruptcy court.

After markets closed Monday, the Durham, N.C.-based chip maker said it plans to emerge from Chapter 11 protection “in the next several weeks” after which it will reduce its debt by 70%.

Shares closed up 48% at $1.82 on Tuesday, though the stock surged by more than 80% in premarket trading. Peers Navitas Semiconductor and Semtech ended the session up 2.7% and 1.6%, respectively.

In June, Wolfspeed disclosed that it had signed a restructuring deal with creditors to cut around $4.6 billion in debt and slash total cash interest payments by 60%. The company formally filed for Chapter 11 bankruptcy on June 30.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com