July 14, 2024
Industry News

Creditors in dispute as Fisker approaches liquidation

NEW YORK — Startup Fisker, a company specializing in electric vehicles, is on the path towards liquidation according to attorneys in U.S. bankruptcy court on Friday. Two creditor factions are gearing up for a battle over which group will be prioritized for repayment.

Filing for bankruptcy protection in Delaware on Monday after facing financial difficulties related to the production of its Ocean SUVs, Fisker initially expressed intentions to secure additional funding and continue on with “reduced operations.” However, Fisker’s attorney Brian Resnick revealed at the hearing in Wilmington that the company currently does not foresee obtaining the necessary financing.

Resnick informed U.S. Bankruptcy Judge Thomas Horan that the company is now planning to liquidate its assets and has tentatively agreed on a deal with a single buyer for all of its 4,300 vehicles.

The California-based company, which was founded by automotive designer Henrik Fisker, has struggled with profitability, recording approximately $273 million in revenue in 2023 but incurring a net loss of $940 million.

Fisker is indebted to two groups of bondholders, with debts totaling over $850 million. Attorneys representing the larger group have accused a minority faction led by Heights Capital Management of taking control of Fisker’s debt in a questionable transaction with the company in November.

At that time, Fisker had failed to provide the required audited financial statements as per its debt agreements, and Heights seized the opportunity to claim all of Fisker’s assets as collateral on its bonds, as noted by Alex Lees, an attorney representing other bondholders.

Lees argued that Fisker should have filed for bankruptcy back in November. He stated that his group plans to challenge the agreement made in November that places Heights at the forefront for repayment in Fisker’s bankruptcy proceedings.

FAQ

1. What led to Fisker’s decision to file for bankruptcy?

Fisker faced financial challenges related to the production of its Ocean SUVs, leading to the decision to file for bankruptcy protection.

2. Who is Henrik Fisker?

Henrik Fisker is an automotive designer and the founder of the California-based company Fisker.

Conclusion

Fisker’s journey towards liquidation highlights the challenges faced by companies in the competitive electric vehicle market. The battle between creditor factions underscores the complexities of navigating financial difficulties in a rapidly evolving industry.

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