Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFisker Automotive Strongly Considers Bankruptcy
Author: Joel R. Glucksman|April 12, 2013
Fisker Automotive Strongly Considers Bankruptcy
Fisker Automotive, a government-backed manufacturer of luxury, plug-in hybrid sports cars, recently sought legal representation in the likely event that it will file for bankruptcy protection.
The company is currently searching for a strategic investor to provide the financial backing that will allow it to avoid bankruptcy proceedings. In the meantime, it was forced to furlough its workforce in an effort to stretch its cash reserves. The manufacturer has failed to produce a vehicle since July 2012, but hopes that a financial backer will enable it to finish the development of its second plug-in hybrid, according to Reuters. Additional troubles, including failed investment talks with China and the sudden resignation of its founder, have also contributed to the company’s money woes.
However, the race to find an investor quickly is heating up, as Fisker needs to make a payment on a U.S. Department of Energy loan that it received in 2009. While the company would not specify the amount, the payment deadline is April 22.
As the company is still seeking financing alternatives, it is unclear whether Fisker would file for bankruptcy law protection under Chapter 11 or Chapter 7 of the Bankruptcy Code. The former would allow the company to reorganize and restructure its debt, while a Chapter 7 filing would result in a simple liquidation.
Fisker Automotive Strongly Considers Bankruptcy
Author: Joel R. Glucksman
Fisker Automotive, a government-backed manufacturer of luxury, plug-in hybrid sports cars, recently sought legal representation in the likely event that it will file for bankruptcy protection.
The company is currently searching for a strategic investor to provide the financial backing that will allow it to avoid bankruptcy proceedings. In the meantime, it was forced to furlough its workforce in an effort to stretch its cash reserves. The manufacturer has failed to produce a vehicle since July 2012, but hopes that a financial backer will enable it to finish the development of its second plug-in hybrid, according to Reuters. Additional troubles, including failed investment talks with China and the sudden resignation of its founder, have also contributed to the company’s money woes.
However, the race to find an investor quickly is heating up, as Fisker needs to make a payment on a U.S. Department of Energy loan that it received in 2009. While the company would not specify the amount, the payment deadline is April 22.
As the company is still seeking financing alternatives, it is unclear whether Fisker would file for bankruptcy law protection under Chapter 11 or Chapter 7 of the Bankruptcy Code. The former would allow the company to reorganize and restructure its debt, while a Chapter 7 filing would result in a simple liquidation.
