A bankruptcy judge has given Fisker the green light to sell more than 3,000 Ocean SUVs. A vehicle leasing company, a deal that will net the defunct EV startup a maximum of $46.25 million. The approval of the sale clears the way for the rest of Fisker’s strategy to play out as it continues to liquidate its failed business.
Judge’s and Objections
The judge’s, issued in a hearing late Tuesday afternoon, comes after Fisker and its legal team received only one major objection to the sale. The Department of Justice’Justice’sof, the U.S. Trustee, had argued that Fisker and its chief restructuring officer, John DiDonato, hadn’t ‘tough work to show it properly shopped the inventory around for the best deal. The Trustee’Trustee’salso said Fisker did not properly explain how it reached the vehicle valuation and was unhappy with how fast its lawyers tried to get the deal done.
Fisker’s to Find Buyers
DiDonato answered each point in greater detail in a Tuesday morning filing. He explained that Fisker had contacted “hundreds” of potential buyers for the stockpile of Ocean SUVs before its mid-June bankruptcy filing, “including” g dealerships, rental car companies, taxicab operators, and participants in the ride-share leasing industry.”
Sale t” American Lease
The returns on that effort were pretty grim, however. The only solid lead Fisker turned up was American Lease, now buying the inventory.
Potential Buyers and Withdrawals
After the bankruptcy filing, one unnamed vehicle manufacturer and an unidentified company that leases vehicles to ride-hail drivers were interested in the fleet. Still, according to DiDonato, that interest was fleeting. The committee of unsecured creditors also found an interested buyer, first revealed last week. DiDonato described that potential buyer as a competitor to American Lease but noted they had withdrawn their offer.
Judge’s and Remarks
Given all this, Judge Brendan L. Shannon agreed that DiDonato and Fisker had done as much as possible to find the best bid. He called American Lease “function” ally a purple unicorn” since “they are not only buying the cars but agreeing to wait until the four pending recalls are cleared before operating them, performing some work on them itself, and working with the newly formed Fisker Owners Association to make spare parts and software support available to 2,500-plus owners.
U.S. Trustee’Trustee’sInvolvement
Shannon thanked the U.S. Trustee’Trustee’sfor pushing DiDonato to share more information. He said this helps establish a more robust record of how Fisker arrived at this point, where American Lease is the best and lone option.
Immediate Steps in the Sale
In the next few days, Fisker will sell around 1,000 Ocean SUVs to American Lease and receive around $14 million in return. Another 500 will likely be handed over to American Lease next week, bringing in another $6 million.
Use of Sale Proceeds
That money will be used to pay the remaining employees working on the recalls, release software updates, and facilitate the continued sales of the vehicles.
Dispute Over Sale Proceeds
Where the rest of the money Fisker gets from American Lease remains under dispute, as it has from the first hearing in June.
Heights Capital Management’s only secured lender is Heights Capital Management, an affiliate of financial services company Susquehanna International Group. Heights loaned more than $500 million to Fisker in 2023. Any collateral did not secure those loans but could be converted to Fisker stock. But when Fisker’sFisker’suarter financial filing was late in 2023, the company breached one of the covenants of the deal with Heights.
Securing the Loans
To repair that breach, Fisker secured the remaining outstanding balance to Heights by pledging all its assets as collateral. Heights has repeatedly asserted through the bankruptcy process that this gives them first dibs on any sale of Fisker’sFisker’s
Chapter 7 Conversion Looms
Tuesday’s meeting revealed that Heights plans to file a motion to convert the Chapter to a Chapter 7 liquidation. The company, the U.S. Trustee, the committee of unsecured creditors, and other parties were able to negotiate with Heights that it won’t aswon’tudge to approve that motion until at least July 29.
Heights Liquidation
Heights’ Heights’ has clarified that they view this case as a liquidation. Scott Grossman, one of the Heights’ Heights’, said Tuesday that this was “probably” the most telegraphed Chapter 7 conversion in history. He added, “The firm wants to liquidate Fisker’s as efficiently as possible without spending as much money as it takes to run a Chapter 11 process.
Challenges to Heights’ Heights’ Lawyers for the committee of unsecured creditors and the U.S. Trustee have challenged ‘Heights’ on the assets in multiple hearings to date. But those arguments have mostly been made at a superficial level. The priority—for almost every party—has been getting the fleet sale approved (and ensuring the process was proper) so that the company didn’t completely fold.
Potential Claims on Other Assets
Based on that fateful 2023 asset pledge, though, Heights could extend to Fisker’s assets beyond the remaining Ocean inventory. The company still has hundreds of millions of dollars of factory equipment in Austria (where contract manufacturer Magna’s Magna’ sy is located). The corporate entity that oversaw that part of the business, Fisker GmbH, is in its insolvency proceeding.
Tensions Over Asset Inclusion
That has caused some tension. Fisker Austria GmbH wanted to include those vehicles in its insolvency. DiDonato said he had to negotiate with Fisker Austria GmbH to include. The 118 Oceans at the factory and another 480 at a nearby port in Belgium in the fleet sale to American Lease. That involved working with the administrators of that insolvency process and the founder, CFO, and COO, Geeta Gupta-Fisker.
Concerns Over Fiduciary Duty
Linda Richenderfer, a lawyer representing the U.S. Trustee, said she found this “particularly” early disturbing, given Gupta’s duty to the parent company Fisker Inc. Both Gupta-Fisker and her husband, founder and CEO Henrik Fisker, are still employed by the company.
Heights’Heights’ion Claim
It was also revealed Tuesday that Heights had submitted a $1 billion claim for the assets in the Fisker Austria GmbH proceeding.
Upcoming Hearings
As vehicle sales start to flow to American Lease. The parties will now focus on the next hearings on July 22 and July 29.
Committee for Time
That [Fisker] and the committee [of unsecured creditors] not be hamstrung. An alleged secured creditor,” Doug M” nal, a lawyer for the committee, said Tuesday. “We are “doing our doing, but it’s important importance. Given the opportunity to the 29th to see if we can reach and make progress. We need time.”
