Fisker, the electric vehicle startup, is facing the prospect of liquidation after filing for bankruptcy protection. The company had been attempting to increase production of its Ocean SUVs but ultimately ran out of cash. Fisker’s attorney, Brian Resnick, stated that the company does not anticipate being able to obtain financing and plans to liquidate its assets. This includes a tentative deal with a single buyer for all 4,300 vehicles.
Founded by automotive designer Henrik Fisker, the California-based company has never turned a profit. In 2023, it generated around $273 million in revenue but suffered a net loss of $940 million. Fisker is heavily in debt, owing over $850 million to two groups of bondholders. A battle is now brewing between these creditor factions over who will be paid first.
Attorneys for the larger bondholder group have accused a minority faction led by Heights Capital Management of seizing control of Fisker’s debt through what they deem to be a suspect transaction. Heights took advantage of Fisker’s failure to provide audited financial statements, claiming all of Fisker’s assets as collateral on its bonds. The larger bondholder group intends to challenge this agreement and its preference for Heights.
Heights’ attorney, Scott Greissman, defended the firm’s actions, stating that Heights had tried to help Fisker survive. He emphasized that Heights would also face significant losses with the expected sale of Fisker’s fleet only covering a fraction of their $185 million debt. With Heights holding the upper hand, the U.S. Department of Justice’s bankruptcy watchdog expects Fisker’s bankruptcy to convert into a straightforward Chapter 7 liquidation after the vehicle fleet is sold.
Fisker’s difficulties began in March when it failed to secure a partnership with a large vehicle manufacturer, rumored to be Nissan. This setback led to production pauses and staff layoffs as the company sought to conserve cash. Fisker’s situation is not unique, as the competitive electric vehicle market has seen other companies, including Proterra, Lordstown, and Electric Last Mile Solutions, file for bankruptcy due to weakening demand, fundraising hurdles, and operational challenges.
Overall, Fisker’s journey from a promising electric vehicle startup to the brink of liquidation paints a bleak picture of the challenges faced by companies in the EV industry. It highlights the importance of securing strong partnerships, managing financial resources effectively, and navigating a highly competitive market with demanding consumers and global supply chain issues. As the industry continues to evolve, companies will need to adapt and address these factors to survive and thrive.
