Fisker, the defunct electric vehicle (EV) startup, has received approval from a bankruptcy judge to sell over 3,000 of its Ocean SUVs to a vehicle leasing company for a maximum of $46.25 million. This decision paves the way for the rest of Fisker’s bankruptcy process to proceed as it continues to liquidate its failed business.
The approval came despite objections from the Department of Justice’s office of the U.S. Trustee, which argued that Fisker had not done enough to find the best deal for its inventory. However, Fisker’s legal team and Chief Restructuring Officer John DiDonato addressed these concerns by explaining that they had contacted hundreds of potential buyers, but American Lease was the only solid lead. Other interested parties had shown fleeting interest after the bankruptcy filing.
Judge Brendan L. Shannon agreed that Fisker had made significant efforts to find the best possible bid and commended the U.S. Trustee’s office for pushing for more information. He described American Lease as a “purple unicorn” for not only buying the cars but also agreeing to wait until the pending recalls were cleared before operating them and working with the newly-formed Fisker Owners Association.
In the coming days, Fisker will sell around 1,000 Ocean SUVs to American Lease for approximately $14 million, with another 500 expected to be handed over next week, bringing in another $6 million. This money will be used to pay the remaining employees working on recalls, software updates, and vehicle sales.
The remaining funds Fisker receives from American Lease are still disputed. Heights Capital Management, Fisker’s largest secured lender, plans to file a motion to convert the Chapter 11 bankruptcy to a Chapter 7 liquidation, aiming to efficiently liquidate Fisker’s assets without incurring high costs.
Heights’ claim to the assets has been challenged by the committee of unsecured creditors and the U.S. Trustee’s office. However, based on Fisker’s asset pledge in 2023, Heights’ claims could extend beyond the Ocean inventory to the company’s factory equipment in Austria.
Tension has arisen over Fisker Austria GmbH’s insolvency proceeding, with Fisker negotiating to include 118 Ocean vehicles at the factory and another 480 at a nearby port in Belgium in the fleet sale to American Lease. The involvement of founder and CFO Geeta Gupta-Fisker in Fisker Austria GmbH’s insolvency process has raised concerns about her fiduciary duty to the parent company.
Furthermore, Heights has submitted a $1 billion claim on the assets in the Fisker Austria GmbH proceeding. The parties involved will now focus on upcoming hearings scheduled for July 22 and July 29.
Overall, Fisker’s approval to sell its Ocean SUVs marks an important step in its bankruptcy process as it seeks to liquidate its assets. Despite challenges from various parties, Fisker has demonstrated its efforts to find the best deal and keep the company afloat during this process. The outcome of the upcoming hearings will determine the next steps for Fisker and its creditors.