Fisker has been facing “potential financial difficulties” since last August, according to a new filing in Chapter 11 bankruptcy proceedings, which began earlier this week.
The admission provides a clearer picture of Fisker’s problems in 2023 as it struggles to increase 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 various new models in development, including a low-cost EV and an electric pickup truck.
“Fisker doesn’t stop,” Henrik Fisker said at the time. “We want the world to know that we have big plans and are going to move into several different segments, redefining each one with a unique blend of design, innovation, and sustainability.”
Prolonged financial woes have prompted Fisker to seek partnerships or investment from other automakers, according to the filing, which was written by the startup’s designated restructuring officer. Talks with the automaker, which Reuters first reported as Nissan, dragged on for months before collapsing earlier this year, putting Fisker in a “precarious position,” according to the filing. Fisker finally stopped production of the Ocean earlier this year, went through several rounds of layoffs, and is now beginning bankruptcy proceedings.
The Chapter 11 process is intended to offer Fisker some “breathing room” to “state its operations while pursuing an orderly and efficient liquidation of its assets.” With so many creditors and debtors, it is not clear that the company will function in a meaningful way if the assets are lost.
One of the more immediate issues to be resolved in the case is what happened to the Fisker Oceans that still cannot be sold. Brian Resnick, a lawyer for Davis Polk who represents Fisker in the Chapter 11 case, said in a hearing that the company has reached an “agreement in principle” to sell 4,300 unsold Oceans to an unnamed vehicle leasing company.
“We find ourselves in a situation where it is necessary to get the approval of this sale on short notice,” said Resnick, although he noted that the lawyers working on behalf of Fisker still need to file an official motion to execute any such sale.
The money generated or the sale of other Fisker assets will go directly to Fisker’s biggest (and only) creditor, Heights Capital Management, an affiliate of financial services giant Susquehanna International Group.
Heights is lending more than $500 million to Fisker in 2023, with an option to convert the loan into stock in the company. Fisker eventually filed its third-quarter financial statements with the SEC, which violated its agreement with Heights. To remedy the breach, Fisker granted Heights a “priority security interest in all existing and future assets.” More violations in the coming months make Heights the driver of Fisker’s financial situation.
However, Fisker said in its Chapter 11 filings that Heights still owes more than $183 million in principal payments to Heights.
Fisker has other assets beyond the Ocean SUV that it could sell in Chapter 11 proceedings, including the equipment used by contract manufacturer Magna to build the vehicle. There are 180 assembly robots, all underbody lines, paint shops, and other tools. Fisker has not offered a specific accounting of the assets or their value, saying only that the total assets are between $500 million and $1 billion. Some of them are “special”, meaning it may be difficult to find a buyer who sees their value.
Fisker also said in one of its filings that the low-cost Pear EV is in “advanced development,” and the Alaska pickup truck is in “late-stage development.” It is currently unclear what, if any, value the vehicle’s design will have. Before filing for bankruptcy, Fisker was sued by Bertrandt AG, the engineering company it hired to develop both vehicles. The company is currently one of Fisker’s largest unsecured creditors in the bankruptcy case.
Alex Lees, an attorney representing another group of unsecured creditors who owe Fisker more than $600 million, expressed concern during the hearing that it would take “too long” for Fisker to file for bankruptcy. He called Fisker’s relationship with Heights a “crooked transaction” and “a terrible deal for (Fisker) and its creditors.” Scott Greissman, an attorney representing Heights’ investment arm, said Lees’ comments were “inappropriate, unsupported.”
The filing so far provides the best look yet at Fisker’s diminished state. The company claims to have 400 employees worldwide, with around 181 still in the US, 70 in Germany, 23 in Austria, and 57 in India. This represents a 75% reduction from the company’s peak.
Fisker also still has about $4 million in various bank accounts, according to another filing. It has another $6 million in restricted cash. Fisker plans to sell nearly $400,000 worth of shares it owns in the European power network Allego to offset the costs of continuing business, according to the budget submitted on Friday. He expects to spend about $1.7 million over the next two weeks to pay employee salaries and benefits. Currently not budgeting for IT/Software, after sales service, or vehicle repurchases.
