Electric vehicle manufacturer, Fisker is seeking approval from the Delaware Bankruptcy Court to sell its remaining inventory of Ocean SUVs in its Chapter 11 bankruptcy proceedings.
The company has a potential buyer lined up: a New York-based vehicle leasing company, which has agreed to purchase 3,321 finished EVs for $46.25 million.
This sale price translates to roughly $14,000 per vehicle, a stark contrast to the original starting price of approximately $70,000.
The proposed sale represents a notable devaluation, even compared to the reduced prices Fisker offered as it spiraled into bankruptcy.
This request for approval is likely to become a contentious issue in the ongoing bankruptcy case.
During the initial hearing on June 21, lawyers for Fisker’s unsecured lenders voiced concerns about not receiving proceeds from such sales. Fisker’s unsecured creditors are owed around $1 billion in total.
The precise value of Fisker’s other assets remains unclear. On Monday, July 1, the company’s lawyers filed a motion to delay the release of this information, citing that it is still being compiled.
The leasing company, American Lease, primarily serves ride-hail drivers in New York City, where a transition to zero-emission fleets by 2030 is mandated.
American Lease has committed not to lease any of the Ocean SUVs until all open recalls are resolved.
American Lease’s involvement began on May 30, when it initially agreed to purchase 2,100 Ocean EVs, just two weeks before Fisker filed for bankruptcy protection.
By June 30, the offer had expanded to include all 3,321 North American-configured vehicles. The deal excludes Canadian-configured vehicles located in Canada.
Under the agreement, American Lease cannot resell the vehicles for 12 months and will buy them on a sliding scale: $3,200 for previously-titled vehicles, $16,500 for those in good working order, and $2,500 for damaged ones.
Calls For Expedited Approval Of Sale
Fisker’s lawyers are pushing for an expedited approval of the sale. They argue that without completing the transaction by July 12, the company will be unable to fund vital business expenses necessary for an orderly liquidation.
Moreover, Fisker will have “no obligation of repair or maintenance of the Vehicles, and Vehicles will be sold ‘as is’ with no express or implied warranties,” according to the agreement.
Fisker also will have “no obligation to update the” vehicles beyond the 2.1 version of its software. Fisker will also give American lease license to access “all relevant source code or other proprietary software operating elements.”
Heights Capital Management, Fisker’s largest secured creditor and an affiliate of Susquehanna International Group, has endorsed the inventory sale. Heights loaned Fisker over $500 million in 2023, and the EV startup still owes nearly $190 million.
A lawyer representing Heights’ investment arm indicated during the June 21 hearing that the sale might cover only a fraction of Heights’ secured debt, shedding light on the financial calculations behind the approval.
Originally, Heights’ loans were convertible notes not secured by collateral. However, when Fisker failed to timely file its third-quarter financial report with the SEC last year, breaching the deal’s covenants, it pledged all its assets as collateral to rectify the breach.
Alex Lees, a lawyer for an informal group of unsecured lenders, criticized the arrangement, calling it a “terrible deal for [Fisker] and its creditors.”
Both Lees and a representative from the US Trustee’s office expressed concerns that the case could shift to a more straightforward Chapter 7 liquidation following the Ocean inventory sale. This scenario could leave unsecured creditors fighting over even fewer assets.
READ ALSO: Accra Mayor Urges Youth Participation in Accra City Cleanliness
