Fisker was facing “potential financial difficulties” in early August, according to new filings in Chapter 11 bankruptcy proceedings initiated by the EV startup earlier this week.
The approval provides a clearer picture of Fisker's problems in 2023 as it struggles to ramp up deliveries of its flagship Ocean SUV, despite then-CEO Henrik Fisker's public assurances. In August 2023, despite Fisker's financial health beginning to weaken, the company held a 'Product Vision Day' event to promote several new models in development, including a low-cost EV and electric pickup truck.
“Fisker doesn’t stand still,” Henrik Fisker said at the time. “We want the world to know that we have big plans and that we are branching out and redefining each with our unique combination of design, innovation and sustainability.”
These looming financial difficulties have prompted Fisker to seek partnerships or investments from other automakers, according to a filing from the startup's appointed chief restructuring officer. Negotiations with the automaker, first reported by Reuters as Nissan, dragged on for months before collapsing earlier this year, leaving Fisker in an “uncertain position,” according to the filing. Fisker eventually halted production of the Ocean earlier this year, went through a series of layoffs, and is now beginning bankruptcy proceedings.
The Chapter 11 proceedings are intended to give Fisker “breathing space” to “pursue an orderly and efficient liquidation of its assets while stabilizing its operations.” With so many creditors and liabilities, it's unclear whether the company will operate in a meaningful way once those assets are gone.
One of the most immediate questions to be resolved in this case is what happens to the remaining unsold Fisker Oceans. Davis Polk attorney Brian Resnick, who is representing Fisker in the Chapter 11 case, said during Friday's hearing that the company had reached an “agreement in principle” to sell 4,300 unsold Oceans to an unnamed vehicle leasing company.
“We are in a situation where we need to urgently request approval for this sale,” Resnick said. However, lawyers acting on behalf of Fisker noted that such a sale would still require the filing of a formal consent form.
Funds raised from other sales of Fisker assets will likely go directly to Fisker's largest (and only) secured creditor, Heights Capital Management, an affiliate of financial services giant Susquehanna International Group.
Heights loaned Fisker more than $500 million in 2023, with the option to convert that debt into company stock. Fisker filed its third quarter financial report late with the SEC, in violation of its trading agreement with Heights. To repair that breach, Fisker granted Heights “a paramount security interest in all existing and future assets.” If additional violations occur in the coming months, Heights will take control of Fisker's financial situation.
Nonetheless, Fisker said in its Chapter 11 filing that it still owes Heights more than $183 million in principal.
Fisker has other assets beyond the Ocean SUV that contract manufacturer Magna could sell in the Chapter 11 process, including equipment used to build the vehicle. There are 180 assembly robots, a full underbody line, a paint shop and other tools. Fisker has not yet provided specific details about those assets or their value, saying only that total assets range between $500 million and $1 billion. Some of them are 'specialized', meaning it can be difficult to find buyers who know the value of their products.
Fisker also said in one of its filings that the lower-priced Pear EV is in “advanced development” and the Alaska pickup truck is in “late development.” It is currently unclear what value the vehicle design holds. Prior to filing for bankruptcy, Fisker was sued by Bertrandt AG, the engineering firm it hired to jointly develop the two vehicles. The company is now one of Fisker's largest unsecured creditors in the bankruptcy case.
Alex Lees, an attorney representing another group of unsecured creditors owed more than $600 million by Fisker, raised concerns at the hearing that Fisker was taking “too long” to file for bankruptcy. He called Fisker's relationship with Heights “a one-sided deal” and “a terrible deal for (Fisker) and its creditors.” Scott Greissman, an attorney representing Heights' investment arm, said Lees' comments were “completely inappropriate and completely unfounded.”
The documentation to date provides the rawest look yet at Fisker's diminished state. The company claims its global workforce has been reduced to 400, with about 181 remaining in the US, 70 in Germany, 23 in Austria and 57 in India. This represents a 75% decline from the company's peak.
Another filing said Fisker had about $4 million left in various bank accounts. It has about $6 million more in restricted cash. Fisker plans to sell about $400,000 worth of stock it owns in European charging network Allego to offset costs for the ongoing part of the business, according to the budget submitted Friday. It expects to spend about $1.7 million on employee salaries and benefits over the next two weeks. There is currently no budgeted expenditure for IT/software, after-sales service or vehicle buy-back.
