Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Fisker Automotive Bankruptcy Case Progressing
Author: Joel R. Glucksman
Date: January 17, 2014
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Fisker Automotive recently filed for bankruptcy, and the bankruptcy case is headed for an important hearing during the second week of January. According to USA Today, a judge will decide whether the company’s assets will be purchased by Hybrid Technologies or opened to an auction.
The company, which is seeking protection under bankruptcy law, is a California hybrid carmaker founded by designer Henrik Fisker. This is not the first time the business has faced controversy, as it received a large $529 million loan from the U.S. Energy Department in the past that caused an uproar, as it was meant to help promote fuel-efficient cars, but ended up being used to attract private funding.
With public and private funding, the company was able to raise more than $1.4 billion. But, high spending along with quality and engineering mistakes led to the draining of funds, and delayed the launch of its vehicle, the Karma. Fisker officially stopped production when it was unable to obtain batteries to complete vehicles.
One company in play to acquire Fisker’s assets is the Wanxiang Group – China’s top auto parts company. The company made an initial $24.725 million bid. According to Reuters, Fisker is opposed to selling to Wanxiang, because it claims the Chinese company played a role in its failure.
“Wanxiang now seeks to profit from a bankruptcy that it helped cause,” Fisker said in a filing.
However, the creditor’s committee doesn’t agree, as it feels the Wanxiang bid proposal is the best option. In fact, the committee even asked the bankruptcy court to allow it to file a lawsuit against former Fisker director David Manion for pushing the sale to an affiliate of Richard Li.
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