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U.S. electric car maker Coda Automotive sought bankruptcy law protection in early May, and now it appears that its financial condition is impacting its affiliate companies and they will be forced into bankruptcy as well. Delaware-based Lio Energy Systems Holdings has filed for protection along with Hong Kong-based Miles Electric Vehicles Ltd.
The companies are petitioning to have their cases jointly administered with those of their parent company Coda Holdings and its affiliates, according to a Reuters report. Lio Energy Systems is considered a direct subsidiary of Coda Holdings, while Miles Electric Vehicles Ltd is a direct subsidiary of Lio Energy. Both companies, while performing different functions, were established in the late 2000s to forge manufacturing agreements with and make investments in China. It is not yet clear whether these two new bankruptcy cases will be managed jointly with those of the other Coda affiliates that have sought bankruptcy.
Most recently, Coda Automotive received bankruptcy court approval to sell its assets for $25 million to a group of lenders, the predominant leader being Fortress Investment Group. Under the terms of the agreement, Fortress will pay $1.7 million in cash. The remaining amount will be received in the form of a “credit bid,” in which Fortress will bid for Coda’s assets using its monetary claims instead of cash, Reuters reports. The agreement is expected to facilitate Coda Automotive’s exit from the car industry and transition to the production of energy storage systems through subsidiary Coda Energy.
“(The ruling) will allow us to emerge in a stronger position to develop our core technology, forge stronger relationships with our partners, and ultimately, enable us to execute our business plan in the growing energy storage sector,” the company said in an email to the news source.
A string of bankruptcy filings among green automakers has created speculation about the future of the electric car industry, which was once thought to be a viable solution to the nation’s energy issues.
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