Fisker has a buyer willing to buy its remaining stock of all-electric Ocean SUVs, and it has… Requested A Delaware bankruptcy court judge overseeing the Chapter 11 case approved the sale.
If the judge agrees, Fisker will be able to sell 3,231 ready-to-run electric vehicles to a New York-based car rental company for $46.25 million. That’s about $14,000 per car — a steep drop from the initial $70,000 some were once asking for. It’s also below the current price of $100,000. Cheap prices Fisker was making its pitch as it spiraled into bankruptcy.
The proposal seeking approval for the sale could be the next flashpoint in Fisker’s Chapter 11 bankruptcy proceedings. Lawyers representing the company’s unsecured lenders already expressed concern at the first hearing on June 21 that they would not receive the proceeds from such sales. Fisker owes about $1 billion in total to all its unsecured creditors.
The full scope of Fisker’s other assets and what they might be worth is also unclear; on Monday, the startup’s lawyers filed a motion Delay release Of this information, partly because it is still being compiled.
The leasing company — which The Wall Street Journal first reported was called American lease — It primarily offers its vehicles to taxi drivers in the New York City area, where fleets must be zero-emission by 2030. The company has agreed to wait to rent any of Oceans’ vehicles until Open Calls It has been processed.
American Lease initially agreed to buy 2,100 Ocean EVs on May 30, just two weeks before Fisker filed for Chapter 11 bankruptcy protection. It increased that offer to buy all 3,231 Oceans ready for sale and ready for North America on June 30. (The deal excludes Canadian-configured vehicles located in Canada.) American Lease can’t resell the vehicles for 12 months. It technically buys Oceans on a sliding scale, paying $3,200 for previously owned vehicles and $16,500 for vehicles in “good condition.” It also buys damaged vehicles for $2,500 each.
The company’s lawyers are trying to complete the sale quickly. a movement They demanded quick approval of the sale, writing that they would be “unable to fund the vital business expenses … necessary to complete an orderly liquidation” if it was not completed by July 12.
Fisker’s lawyers said at an emergency hearing Wednesday that they want to sell an initial 200 Oceans units to American Lease by July 12 to generate $2.8 million to cover employee salaries and other expenses. But before it can do that, it will have to resolve a recently reported problem with Oceans’ water pumps. Some of Fisker’s remaining employees will take over that task; the startup still has 179 employees (mostly salaried) on the payroll but is downsizing to about 138, said John DiDonato, chief restructuring officer.
DiDonato confirmed that CEO and founder Henrik Fisker, as well as co-founder, CFO and COO Geeta Gupta Fisker, are still getting paid, though he did not say how much they are getting. He said their salaries are “subject to adjustment” and “possible deferrals.”
Linda Richenderfer, an attorney for the U.S. trustee’s office, said during the hearing that she was concerned about the speed with which Fisker’s attorneys were trying to push through the vehicle sale, given that the unsecured creditors’ committee still lacks legal representation. (A lawyer representing Fisker echoed her concerns.) Newly formed Fisker Owners AssociationShe also said Fisker gave the impression it would take weeks before they would try to approve the sale, something a lawyer for the startup denied.
During the hearing, Richenderfer asked DiDonato whether Fisker would be able to pay its employees’ next paychecks with whatever cash it had on hand. Both Richenderfer and Fisker’s lawyers said that wouldn’t be possible, but they struggled to explain to Richenderfer—and to the court—the exact amount and pace of the startup’s obligations over the next few weeks.
“I’m completely confused,” Judge Thomas Horan said after DiDonato stepped down from the witness stand. He allowed both sides a 30-minute break to better understand each other. When the court resumed and he asked if time was helpful, Richenderfer said bluntly, “No.”
A new hearing has been set for July 11. Next week, Fisker and the restructuring officer will have to better explain to Richenderfer and the many unsecured creditors why they need to push the sale so quickly.
Once the sale is completed, Fisker will have “no obligation to repair or maintain the vehicles, and the vehicles will be sold ‘as is’ without any express or implied warranties,” according to the agreement. Fisker will also have “no obligation to update” the vehicles beyond version 2.1 of its software. Fisker will also grant American Eagle a license to access “all relevant source code or other proprietary software components.”
The stock sale has the approval of Fisker’s largest secured creditor, Heights Capital Management, a subsidiary of financial services firm Susquehanna International Group. Heights lent Fisker more than $500 million in 2023, and the electric-vehicle startup still owes about $190 million. A lawyer representing Heights’ investment arm said at the June 21 hearing that the sale “may pay off a small portion of Heights’ secured debt” — and now we have a clearer picture of the math he was running through at the time.
Originally, Heitz’s loans to Fisker weren’t backed by collateral—they were convertible notes that could be repaid or exchanged for shares in the electric-vehicle startup. But when Fisker missed filing its third-quarter financial report with the Securities and Exchange Commission last year, it was a technical breach of one of the terms of the deal with Heitz. To fix the breach, Fisker pledged all of its assets as collateral for the remaining debt.
“This was a terrible deal for us,” Alex Lees, a lawyer who represented an informal group of unsecured lenders, said at the first hearing. [Fisker] Lees and Richenderfer expressed “grave concern” that the case could move to a more straightforward Chapter 7 liquidation after the Ocean stock sale. In that scenario, unsecured creditors could end up fighting over less.
Updated with information from an emergency hearing held Wednesday afternoon.