Fisker has found a ready purchaser for its stock of all-electric Ocean SUVs and has requested approval from the Delaware Bankruptcy Court judge handling its Chapter 11 case to proceed with the sale.
Should the court give the green light, Fisker will sell 3,231 electric vehicles to a vehicle leasing company based in New York for $46.25 million. This translates to approximately $14,000 for each vehicle — a significant drop from their initial starting prices around $70,000 and even below the reduced prices Fisker had set while nearing bankruptcy.
The request for sale approval could spark contention during Fisker’s Chapter 11 bankruptcy discussions. At the preliminary hearing on June 21, attorneys for Fisker’s unsecured creditors voiced their concern over not benefiting from the sale’s proceeds. Fisker’s debt to its unsecured creditors totals around $1 billion.
Additionally, the full extent and value of Fisker’s remaining assets remain unclear; on Monday, the startup’s attorneys requested a postponement for disclosing this information as it is still being consolidated.
The leasing firm — initially identified by The Wall Street Journal as American Lease — specializes in providing vehicles to ride-hailing drivers in New York City, aiming for a zero-emission fleet by 2030. The firm has agreed to postpone leasing any Oceans until pending recalls are resolved.
Originally, American Lease committed to acquiring 2,100 Ocean EVs on May 30, shortly before Fisker’s bankruptcy filing. The offer was then increased to include the purchase of all 3,231 North America-configured Oceans, excluding those for the Canadian market, on June 30. The agreement restricts American Lease from reselling the vehicles for a year, with a variable payment plan based on vehicle condition.
Fisker’s legal team is urging for a swift sale approval. They argue that without it by July 12, the company will struggle to meet essential business expenses necessary for an orderly wind-down.
In an urgent court session on Wednesday, Fisker’s representatives revealed plans to sell 200 Oceans to American Lease by July 12, aiming to raise $2.8 million to cover wages and other immediate costs. However, they must first address a recent issue with the vehicles’ water pumps, with some Fisker staff tasked with the repair efforts. Currently, Fisker retains 179 workers, with plans to reduce this number to approximately 138, according to chief restructuring officer John DiDonato.
DiDonato also noted that Fisker’s CEO Henrik Fisker and co-founder Geeta Gupta-Fisker remain on the payroll, undergoing salary adjustments and potentially deferrals.
During the court proceedings, concerns were raised by Linda Richenderfer of the U.S. Trustee’s office over the rapid pace at which Fisker’s sale is being pushed, especially since the unsecured creditors’ committee lacks legal representation. These concerns were echoed by representatives from the Fisker Owners Association and U.S. Bank, the latter being owed over $600 million.
Judge Thomas Horan expressed confusion after testimony, prompting a break for parties to clarify their positions. The effectiveness of this break was openly doubted by Richenderfer, indicating ongoing uncertainties regarding the sale.
A follow-up hearing is scheduled for July 11, where Fisker and the restructuring officer must better justify the need for a rapid sale to the concerned parties.
Upon completion, the sale agreement specifies that Fisker has “no repair or maintenance obligations for the Vehicles, which are sold ‘as is’ without any warranties.” Fisker will also not update the vehicles beyond software version 2.1 but will grant American Lease access to all necessary source codes and proprietary software.
Heights Capital Management, Fisker’s major secured creditor, has endorsed the inventory sale after lending the company over $500 million in 2023. Fisker still owes Heights nearly $190 million. A representative for Heights at the June 21 hearing commented the sale might partially reduce the secured debt owed to them.
The agreement with Heights initially did not involve collateral but converted to a secured loan following a breach of financial reporting deadlines. This change has led to concerns that the sale could lead to a simplification of the bankruptcy proceedings, potentially leaving unsecured creditors with even less.
This article has been updated following an urgent hearing on Wednesday afternoon.
Compiled by Techarena.au.
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