Fisker faced “potential financial difficulties” as early as August last year, according to a new filing in the Chapter 11 bankruptcy proceedings, which the EV startup initiated earlier this week.
The admission provides a clearer picture of Fisker's troubles in 2023, when the company struggled to ramp up deliveries of its flagship Ocean SUV despite CEO Henrik Fisker's assurances to the public at the time. In August 2023, even as Fisker's financial health began to decline, the company held a “Product Vision Day” event to promote several new models in development, including a low-cost EV and an electric pickup.
“Fisker doesn't stand still,” Henrik Fisker said at the time. “We want the world to know that we have big plans and plan to move into different segments, redefining each segment with our unique blend of design, innovation and sustainability.”
That looming financial need led Fisker to seek a partnership or investment from another automaker, according to the filing, which was written by the startup's appointed chief restructuring officer. Discussions with that car manufacturer, which Reuters has first reported It would be Nissan, which dragged on for months before falling apart earlier this year, leaving Fisker in “a precarious position,” according to the filing. Fisker ultimately stopped production of the Ocean earlier this year, went through multiple layoffs and is now beginning the bankruptcy process.
The Chapter 11 proceedings are intended to provide Fisker with some “breathing room” to “stabilize operations while pursuing an orderly and efficient liquidation of assets.” With so many creditors and debts, it's unclear whether the company will be able to operate in a meaningful way once these assets are gone.
One of the more immediate issues to be resolved in this case is what happens to the remaining Fisker Oceans that remain unsold. Brian Resnick, a Davis Polk attorney representing Fisker in the Chapter 11 case, said during a hearing Friday that the company has reached an “agreement in principle” to sell the 4,300 unsold Oceans to an unnamed car leasing company.
“We are in a situation where we need to seek approval for this sale at short notice,” Resnick said, although he noted that the attorneys working on Fisker's behalf would still need to file an official request to execute such a sale.
The money generated from this or any other sale of Fisker's assets will likely go directly to Fisker's largest (and only) creditor, Heights Capital Management, a subsidiary of the financial services firm Susquehanna International Group.
Heights loaned more than $500 million to Fisker in 2023, with the option to convert that debt into stock in the company. Fisker was late filing its third-quarter financial report with the SEC, which violated a covenant of that deal with Heights. To remedy that breach, Fisker Heights granted “first priority security interests on all existing and future assets.” Further breaches in the coming months put Heights in the driver's seat of Fisker's financial situation.
And yet Fisker says in its Chapter 11 filings that it still owes Heights more than $183 million in principal payments.
Fisker has other assets besides the Ocean SUVs that it can sell in the Chapter 11 process, including equipment that contract manufacturer Magna used to build the vehicles. There are 180 assembly robots, a full bodywork line, a paint shop and other tools. Fisker has not yet offered a specific accounting of those assets or their value, saying only that the total assets are between $500 million and $1 billion. Some of them are 'specialized', meaning it can be difficult to find a buyer who sees value in them.
Fisker also says in one of the documents that its low-cost Pear EV was in “advanced development,” and that the Alaskan pickup was in “late stages of development.” It is currently unclear what value, if any, these vehicle designs have. Prior to the bankruptcy filing, Fisker was sued by Bertrandt AG, the engineering firm it hired to co-develop both vehicles. That company is now one of Fisker's largest unsecured creditors in the bankruptcy case.
Alex Lees, an attorney representing another group of unsecured creditors to whom Fisker owes more than $600 million, expressed concern at the hearing that it took “too long” for Fisker to file for bankruptcy. He called Fisker's relationship with Heights a “lopsided transaction” 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 unsupported.
The documents so far provide the rawest look yet at Fisker's diminished condition. The company claims to have just 400 employees worldwide, with about 181 remaining in the US, 70 in Germany, 23 in Austria and 57 in India. That represents a 75% decline from the company's peak.
Fisker also has approximately $4 million in his various bank accounts, according to Fisker another submit. It still has about $6 million in escrow cash. Fisker plans to sell nearly $400,000 worth of shares it owns in European charging network Allego to help offset the costs of continuing parts of the business, according to a budget Submitted Friday. It expects to spend about $1.7 million on employee payroll and benefits over the next two weeks. It currently does not budget for expenditure on IT/Software, after-sales service or vehicle buybacks.
