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Tesla's competitor is marching toward liquidation, and creditors are hanging on

Tesla's competitor is marching toward liquidation, and creditors are hanging on

California-based Fisker filed for bankruptcy protection in Delaware on Monday after ramping up production of its Ocean SUVs depleted its cash reserves. Although it originally requested additional funding and planned to continue “reduced operations,” The company does not currently expect to be able to obtain financing Fisker's attorney, Brian Resnick, said at the court hearing.

According to Reuters, the company plans to liquidate. A preliminary agreement has already been concluded with a buyer for the fleet of 4,300 vehicles.

Founded by automobile designer Henrik Fisker, the company was never profitable. In 2023, it achieved revenues of about $273 million, while its net loss amounted to $940 million.

Fisker owes more than $850 million to two groups of bondholders. Lawyers for the larger group accused a minority group led by Heights Capital Management of taking control of Fisker's debt in a “suspicious” deal in November. “Almost the entire business has been turned over to Heights,” Alex Lees, a lawyer for the other bondholders, told Judge Horan. According to Lees, the company should have already declared bankruptcy in November. His group also wants to challenge the November agreement that prioritized the Highlands for repayment. The expected fleet sale would cover only a small portion of Heights' $185 million in debt, leaving little hope for other creditors.

Source: Reuters

Cover image source: Shutterstock

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