Fisker was facing “potential financial distress” as early as last August, according to a new filing in the electric car startup’s Chapter 11 bankruptcy proceedings. I started Earlier this week.
The confession provides a clearer picture of Fisker’s problems in 2023 when it was struggling to get by Intensifying delivery operations Of its flagship Ocean SUV, despite CEO Henrik Fisker’s assurances to the public at the time. In August 2023, even as Fisker’s financial health began to decline, the company held a “Product Insight Day” event to promote multiple new models in development, including a low-cost electric car and an electric pickup truck.
“Fisker does not stand still.” Henrik Fisker He said at the time. “We want the world to know that we have big plans and intend to move into several different sectors, redefining each with our unique blend of design, innovation and sustainability.”
This looming financial distress prompted Fisker to seek a partnership or investment from another automaker, according to the filing written by the startup’s appointed chief restructuring officer. Talks with the automaker by Reuters first mentioned To be a Nissan, it was towed for several months before collapsing earlier this year, putting Fisker in a “perilous situation,” according to the filing. Fisker ultimately halted production of the Ocean earlier this year, has undergone multiple rounds of layoffs, and is now beginning the bankruptcy process.
The Chapter 11 proceedings are intended to give Fisker some “breathing room” to “stabilize operations while pursuing an orderly and efficient asset divestment.” With so many creditors and debts, it is unclear whether the company will operate in any meaningful way once those assets are gone.
One of the immediate issues set to be resolved in this case is what happens to the remaining Fisker Oceans that have not been sold. Brian Resnick, an attorney for Davis Polk who is representing Fisker in the Chapter 11 case, said at a hearing Friday that the company had reached an “agreement in principle” to sell 4,300 unsold Oceans vehicles to an unnamed car rental company.
“We find ourselves in a position where we need to get approval for this sale on short notice,” Resnick said, though he noted that attorneys working on behalf of Fisker would still need to submit a formal request to effect any such sale. The tribe.
The money from that or any other sales of Fisker assets will likely go directly to Fisker’s largest (and only) secured creditor, Heights Capital Management, a subsidiary of financial services giant Susquehanna International Group.
Heights loaned more than $500 million to Fisker in 2023, with an option to convert this debt into shares in the company. Fisker was late in filing its third-quarter financial report with the Securities and Exchange Commission, breaching the covenant of that deal with Heights. To remedy this breach, Fisker granted Heights “a first-priority security interest in all existing and future assets.” More violations in the coming months put Heights in the driver’s seat regarding Fisker’s financial situation.
However, Fisker says in its Chapter 11 filings that it still owes Heights more than $183 million in milestone payments to Heights.
Fisker has other assets beyond the Ocean SUVs that it can sell in the Chapter 11 process, including equipment that manufacturer Magna used to build the vehicles. There are 180 assembly robots, a complete bottom line, a paint shop, and other tools. Fisker has not yet provided a specific account for those assets or their value, saying only that its total assets range between $500 million and $1 billion. Some are “niche,” meaning it may be difficult to find a buyer who sees value in them.
Fisker also says in a filing that its low-cost Pear EV was in “advanced development,” and that its Alaskan pickup truck was in “late stage development.” It is unclear at this time what, if any, value these vehicle designs hold. Before declaring bankruptcy, it was Fisker File a lawsuit against By Bertrandt AG, the engineering company hired to participate in the development of these two vehicles. The company is now one of Fisker’s largest unsecured creditors in the bankruptcy case.
Alex Lees, an attorney representing another group of unsecured creditors to whom Fisker owes more than $600 million, raised concerns during the hearing that it took “too long” for Fisker to file for bankruptcy. He described Fisker’s relationship with Heights as a “lopsided deal” and a “terrible deal.” [Fisker] And its creditors.” Scott Griezmann, a lawyer representing Heights’ investment arm, said Liz’s comments were “completely inappropriate and completely unsupported.”
The recordings so far provide the first look yet at Fisker’s diminished condition. The company claims to have 400 employees globally, with about 181 remaining in the US, 70 in Germany, 23 in Austria, and 57 in India. This represents a 75% decline from the company’s peak.
Fisker also has about $4 million remaining in its various bank accounts, according to last Deposit. It has about another $6 million in restricted cash. Fisker plans to sell approximately $400,000 of shares it owns in European shipping network Allego to help offset costs for ongoing parts of the business, according to Fisker. budget Submitted Friday. It expects to spend about $1.7 million over the next two weeks on employee salaries and benefits. It does not currently budget for any IT/software spending, aftersales service, or vehicle buybacks.