NEW YORK — Electric vehicle startup Fisker is moving toward liquidation, lawyers said in U.S. bankruptcy court on Friday, as two factions of creditors preview a battle over which group will be paid first.
Fisker filed for bankruptcy protection in Delaware on Monday after burning through cash in an effort to ramp up production Ocean SUVs. The company initially said it will seek additional financing and continue to “reduce operations,” but Fisker attorney Brian Resnick said at the hearing in Wilmington that the company “does not currently anticipate obtaining financing.”
Resnick told U.S. Bankruptcy Judge Thomas Horan that the company plans to liquidate its assets and that it has reached a tentative agreement with a single buyer for all 4,300 of its vehicles.
The California-based company, founded by auto designer Henrik Fisker, has never turned a profit, with revenue of about $273 million in 2023 and a net loss of $940 million.
Fisker owes two groups of bondholders more than $850 million, and lawyers for the larger group have accused a minority faction led by Heights Capital Management of gaining control of Fisker’s debt in November through a “questionable” transaction. ” with Fisker.
At the time, Fisker was slow to provide audited financial statements under its debt contracts, and Heights took advantage of that “minor technical violation” to lay claim to all of Fisker’s assets. as collateral for its bonds, said Alex Lees, a lawyer for the other bondholders. .
“They basically handed over the entire business to Heights,” Lees told Horan. “Fisker liquidated outside the supervision of this court, essentially for the sole benefit of one creditor.”
Lees said Fisker should have filed for bankruptcy in November. Lees said his group intends to challenge the November agreement that put Heights first to repay debt in Fisker’s bankruptcy case.
Heights attorney Scott Greissman said Lees’ claims were “outrageous” and that Heights tried to help Fisker survive.
“There may be a lot of disappointed creditors, but none more so than Heights,” Greissman said.
Greissman said the sale of Fisker’s fleet is expected to pay off only a “portion” of Heights’ $185 million debt. That would leave little hope of repayment for other creditors.
Linda Richenderfer, an attorney for the U.S. Department of Justice’s bankruptcy watchdog, said Heights appears to hold all the leverage, making Fisker’s bankruptcy likely to convert to a simple Chapter 7 liquidation after the fleet is sold.
Heights “is getting everything they want,” Richenderfer said. “There’s no reason next week to agree to anything more.”
Fisker’s fate was sealed in March, when it failed to strike a partnership with a major vehicle manufacturer – something Reuters reported. Nissan. Before the failure, Fisker halted production and laid off employees to save cash, Resnick said.
The hyper-competitive electric vehicle market has seen several companies, including Proterra, Lordstown and Electric Last Mile Solutions, which filed for bankruptcy over the past two years as it struggled with weakening demand, fundraising hurdles and operational challenges from global supply chain problems.
