By Dietrich Knauth
NEW YORK (Reuters) – Electric vehicle startup Fisker is headed for liquidation, lawyers said in U.S. bankruptcy court on Friday, as two creditor factions previewed a battle over which group will be paid first.
Fisker filed for bankruptcy protection in Delaware on Monday after burning through cash trying to ramp up production of its Ocean SUVs. The company initially said it would seek additional financing and continue “reduced operations,” but Fisker’s attorney Brian Resnick said at the hearing in Wilmington that the company “does not currently expect to be able to obtain financing.”
Resnick told U.S. Bankruptcy Judge Thomas Horan that the company planned to liquidate its assets, and that it has reached a tentative deal with a single buyer for all of its 4,300 vehicles.
The California-based company, founded by car designer Henrik Fisker, has never been profitable, with 2023 sales of about $273 million and a net loss of $940 million.
Fisker owes more than $850 million to two groups of bondholders, and lawyers for the larger group accused a minority faction led by Heights Capital Management of taking control of Fisker’s debt in November in a “suspicious” transaction with Fisker.
At the time, Fisker was late in providing audited financial statements due under its debt agreements, and Heights used that “minor, technical omission” to claim all of Fisker’s assets as collateral on its bonds, said Alex Lees, an attorney for other bondholders. .
“They basically turned the whole thing over to Heights,” Lees told Horan. “Fisker has liquidated without the supervision of this court, in principle solely for the benefit of one creditor.”
Lees said Fisker should have filed for bankruptcy in November. His group plans to challenge the November agreement, which put Heights at the front of the line for repayment in Fisker’s bankruptcy, Lees said.
Heights’ attorney, Scott Greissman, said Lees’ claim was “outrageous” and that Heights tried to help Fisker survive.
“There may be many disappointed creditors, but none more so than Heights,” Greissman said.
Greissman said the expected sale of Fisker’s fleet would pay only a “fraction” of Heights’ $185 million in debt. That would leave little hope of repayment for other creditors.
Linda Richenderfer, an attorney for the U.S. Justice Department’s bankruptcy watchdog, said Heights appeared to have all the power in its hands, making it likely that Fisker’s bankruptcy would turn into a simple Chapter 7 liquidation once the fleet is sold.
Heights “gets everything it wants,” Richenderfer said. “There is no reason to agree to more next week.”
Fisker’s fate was sealed in March when it failed to secure a partnership with a major automaker — Nissan, according to Reuters. Before that failed, Fisker halted production and laid off workers to save money, Resnick said.
In the hyper-competitive EV market, several companies, including Proterra, Lordstown and Electric Last Mile Solutions, have filed for bankruptcy in the past two years as they grapple with declining demand, fundraising hurdles and operational challenges due to global supply chain issues.
(Reporting by Dietrich Knauth, editing by Alexia Garamfalvi and Cynthia Osterman)
