Fisker's hopes for a quick exit from Chapter 11 bankruptcy hinge on the approval of a bulk sale for its remaining inventory of Ocean electric SUVs. However, the proposed deal with a New York leasing company raises concerns among unsecured creditors about transparency and potential shortfalls.
Fire Sale Price for Fisker's Ocean SUVs
The proposed sale involves 3,231 Ocean SUVs being sold to American Lease for a total of $46.25 million. This translates to a fire-sale price of roughly $14,000 per vehicle, significantly lower than the original starting price of around $70,000. The deal reflects Fisker's dire financial situation and urgency to generate cash.
Concerns from Unsecured Creditors
The low price point and the expedited approval process raise red flags for Fisker's unsecured creditors. They owe the company a combined total of roughly $1 billion and worry that the sale proceeds won't be sufficient to cover their claims. Additionally, the lack of clarity regarding Fisker's other assets and their value further fuels their skepticism.
American Lease and the Future of the Oceans
The buyer, American Lease, caters primarily to ride-hailing drivers in New York City, where regulations mandate zero-emission fleets by 2030. The company has agreed to hold off leasing the Oceans until outstanding recalls are addressed, ensuring the safety of future drivers.
Fisker's Financial Strain and Payroll Concerns
Fisker's lawyers emphasize the urgency of the sale, stating the company lacks the funds to cover essential expenses beyond July 12th if the deal isn't approved.
According to TechCrunch, an initial sale of 200 Oceans to American Lease by that date would generate $2.8 million to cover payroll and other immediate costs. However, a newly discovered water pump issue with the Oceans throws a wrench into the plan, requiring further delays and repairs by the remaining Fisker employees.
Uncertain Future for Fisker Leadership
The court hearing revealed that Fisker's founders and top executives remain on the payroll, prompting questions about their compensation during this critical period. While their salaries will be adjusted and potentially deferred, the exact details remain murky.
Transparency and Communication Issues
The rapid sale push by Fisker's lawyers has drawn criticism. The unsecured creditors' committee lacks legal representation, hindering their ability to participate effectively.
The court also expressed frustration with the lack of clarity regarding Fisker's financial obligations and the urgency behind the sale.
Next Steps: Scrutiny and Negotiations
A new hearing has been scheduled for next Thursday, July 11. In the coming days, Fisker and the restructuring officer must provide a more transparent picture of their financial situation and demonstrate a compelling justification for the rapid sale of the Ocean SUVs.
Unsecured creditors will have a chance to scrutinize the deal and potentially negotiate for a better outcome.
The Fate of Fisker and the Ocean SUV
The fate of Fisker and the Ocean SUV rests heavily on the court's approval of the proposed sale.
If approved, American Lease will acquire the vehicles "as is" with no warranties or future software updates. Fisker will also provide the leasing company with access to the vehicle's software source code.
The sale has the blessing of Fisker's largest secured creditor, but it likely won't come close to satisfying the claims of unsecured creditors.
The coming week will be crucial in determining the future of Fisker. The important question about this is: Can the EV maker convince the court and its creditors of the necessity of the sale, or will the deal fall through, potentially leading to a Chapter 7 liquidation and a significantly worse outcome for unsecured creditors?
