Fisker Automotive Expected to File Chapter 11 Bankruptcy This Week
April 10, 2013 8:52 AM
Fisker's attorneys have already drawn up bankruptcy papers
It's clear that Fisker Automotive has been struggling, and we may see the result of that struggle as early as this week when the automaker is expected to file for Chapter 11 bankruptcy.
According to Reuters, Fisker's attorneys have already drawn up bankruptcy papers and will file within the next few days.
The automaker's board of directors will talk their options over at a meeting today and make a decision regarding the Chapter 11 filing's timing.
Fisker's upcoming bankruptcy filing comes as no surprise, considering the company has been in a rut ever since its federal loans from the U.S. Department of Energy (DOE) were frozen back in 2011.
In April 2010, Fisker received $529 million in
progress development of high-tech vehicles. However, Fisker fell a little behind on its production schedule, and in May 2011,
DOE froze the loans due to "unmet milestones."
Fisker had only drawn $193 million of it at that point.
Due to these frozen loans, Fisker is having a hard time securing funds to make its second car -- the Fisker Atlantic. Fisker is now looking for investors to help out financially, but the company's investor solution has drawn a lot of criticism because two potentials have been Chinese companies -- Zhejiang Geely Holding Group and Dongfeng Motor Group Co. This is seen as an issue because Fisker received U.S. taxpayer dollars to fund its Karma plug-in.
The Karma itself has had to be recalled in the past too, as battery supplier A123 Systems (which
last year and was later
acquired by Chinese firm
Wanxiang Group for about $260 million) vowed to replace nearly 600 Karma batteries for $55 million in 2012.
Last month, things started getting worse for Fisker when Henrik Fisker, who co-founded Fisker Automotive in 2007,
stepped down as executive chairman
citing "several major disagreements" with "Fisker Automotive executive management on the business strategy."
Only weeks ago, the company was forced to
put its U.S. workers on furlough
to try and keep costs down while it searches for an investor. This means that the U.S. workforce had a temporary, unpaid leave until the company got back on its feet.
However, Fisker employment took a much bigger hit earlier this week when
it laid off 75 percent of its workforce
(or about 160 employees). As if this wasn't bad enough, Fisker is now facing a federal lawsuit that accuses the company of not giving employees advanced notice of the mass layoffs. Under the U.S. Worker Adjustment and Retraining Notification Act, workers are supposed to have 60 days notice before being laid off.
Fisker Automotive is expected to make a loan payment to the DOE on April 22.
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