A bankruptcy judge approved Fisker’s plan to sell more than 3,000 vehicles to a leasing company.
In a hearing Tuesday afternoon, Judge Brendan L. Shannon, U.S. Bankruptcy Judge for the District of Delaware, formally gave the green light to Fisker Inc. to liquidate its remaining inventory to American Lease. The deal originally came to light earlier this month as part of the EV company’s court proceedings as it navigates bankruptcy proceedings. However, the Department of Justice’s office of the U.S. Trustee objected to the sale, arguing Fisker’s lawyers and John DiDonato, the company’s chief restructuring officer, hadn’t done their due diligence to find the best possible bid.
DiDonato refuted that point in a Tuesday morning filing, saying Fisker contacted “hundreds” of potential buyers to sell its stockpile of Ocean SUVs, that initially retailed for between $41,437 and $63,937. The only promising lead in that search was New York-based Uber lessor American Lease, which offered $46.25 million to buy the entire inventory at an average of $14,000 per car. A committee of unsecured creditors also found an interested buyer, but DiDonato mentioned that buyer had withdrawn their offer last week, leaving the American Lease deal as the only pending deal moving forward.
Judge Shannon sided with Fisker in this week’s hearing, green-lighting the sale to go through, satisfied the company had done enough to find the best possible buyer, given the situation. It’s worth, as Shannon did, that they are not just buying the cars lock, stock and barrel. Rather, they will receive the cars in waves, as Fisker is keeping some employees on their payroll to complete four pending recall repairs before turning all 3,321 cars to American Lease.
With the court’s approval, Fisker will sell nearly 1,000 vehicles to American Lease in the coming days, receiving around $14 million of the agreed upon sum. Another 500 may be handed over next week, netting another $6 million, while the company will continue paying what few employees it has left to repair the remaining cars and successfully complete the deal.
What happens to Fisker after this deal, and what happens to private owners?
While employee compensation comes off the top of the $46.25 million deal, where the rest of the money goes is still being disputed. Fisker Inc. has one secured creditor, Heights Capital Management, which loaned the automaker $500 million in 2023. Initially, the loans were unsecured by any collateral, but they would instead convert into Fisker stock. Fisker breached one of the terms of its contract with Heights when it filed its third-quarter 2023 earnings report late, leading it to secure the loans by pledging all its remaining assets as collateral.
Heights’ lawyers filed a motion Tuesday to convert Fisker’s Chapter 11 restructuring proceedings into a Chapter 7 liquidation, as it is first in line for any proceeds from the American Lease sale as a secured creditor. One of those lawyers referred to this case as “probably the most telegraphed chapter 7 conversion in history”, as both the firm and a committee of unsecured creditors wanted this sale to go through as efficiently as possible. The unsecured creditors take issue with Heights’ claims to all of Fisker’s assets, however, as repaying that secured creditor would leave nothing left for any remaining unsecured creditors waiting in line.
Heights also submitted a $1 billion claim on the assets of Fisker Austria GmbH, which is in its own insolvency proceedings.
With the American Lease sale now on track, all parties are looking ahead to two upcoming hearings on July 22 and July 29 to continue sorting out who will be paid from the liquidation of Fisker’s assets, including the 3,000-plus Oceans to American Lease.
As for the 2,500-or-so owners who bought into the Ocean SUV before Fisker imploded, the newly formed Fisker Owners Association aims to make parts and software support available to those individuals.