Is Fisker Automotive About To Declare Bankruptcy?

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Henrik Fisker

Henrik Fisker

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Storm clouds continue to gather over troubled luxury electric-car startup Fisker Automotive.

We reported on Thursday that Fisker had put its entire U.S. staff on a "temporary" furlough to conserve cash.

Later that day, a Wall Street Journal article reported on what may be the logical next step: Fisker had "hired restructuring lawyers at Kirkland & Ellis LLP," it wrote, to help the company prepare for the possibility of a bankruptcy filing.

One deadline that would drive such a filing: Fisker faces an April 22 deadline for a payment to the U.S. Department of Energy on its low-interest loan under the Advanced Technology Vehicle Manufacturing program.

The DoE had originally awarded Fisker $529 million in loans in September 2009, but loan disbursements were frozen in 2011 after Fisker missed numerous deadlines for production of the Karma.

It had received a total of $192 million at that point.

While Fisker had downplayed last week's furlough--saying, in effect, that furloughs happen frequently in the auto industry--financial analysts considered it a serious and worrisome move.

The company hasn't built a single Karma range-extended luxury sport sedan since last summer, due to the banktuptcy of A123 Systems, its lithium-ion cell supplier.

That means it has no source of income. Tony Posawatz, the CEO it hired last August, has been meeting with potential investors and acquirers for several months now.

But his goal of signing a deal by the end of February passed with no agreement.

Reports later indicated that Fisker's plans had been too risky for two potential Chinese investors, the Zhejiang Geely group (which owns Volvo) and the state-owned Dongfeng Motor Group.

Not only was the outstanding U.S. government loan a major hurdle, but sources close to the negotiations say that the company proposed a large and costly restructuring plan that simply proved too expensive for the Chinese investors.

Two weeks ago, cofounder Henrik Fisker left the company that bears his name, saying, "It would have been wrong to stay."

2012 Fisker Karma outside Tesla Motors dealership during test drive, Los Angeles, Feb 2012

2012 Fisker Karma outside Tesla Motors dealership during test drive, Los Angeles, Feb 2012

Enlarge Photo

We contacted Fisker's Senior Director of Global Communications and PR, Roger Ormisher--twice, once on Thursday and once late Saturday--for comments on the speculation that Fisker is preparing to declare bankruptcy.

"We have no official comment to add at this stage," Ormisher told Green Car Reports.

"We promise to update once we have clearer information."

Because Fisker Automotive pledged its property and intellectual assets to the DoE as loan collateral, the U.S. government might end up holding those assets if Fisker does file for bankruptcy.

A Fisker insider tells us that the situation is "fast moving and changing constantly, with [many] stakeholders involved."

We'd expect some kind of announcement during the coming week or two, certainly before the April 22 deadline.

Stay tuned.


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Comments (9)
  1. "The company hasn't built a single Karma range-extended luxury sport sedan since last summer, due to the banktuptcy of A123 Systems, its lithium-ion cell supplier."

    Nearly every article says this, but it's clearly wrong. Karma production stopped in July with Valmet's summer break. The reason they didn't start production again in August has to be due to over supply/low demand. The fact that there are still new unsold Karmas available at dealers (even after loosing 338 cars to Sandy) attests to this.

    The A123 bankruptcy happened in October. It was only then that Fisker admitted that they hadn't produced any cars for the previous month. It wasn't till December or so that they admitted they hadn't built any cars since July.

  2. Anyhow my point is that the production stoppage blamed on A123 is Fisker PR spin that news outlets parrot. The facts show that the two are basically decoupled.

  3. If you are right my hunch would be that demand for the Karma was wiped out by Model S.

    It never stood a chance: Model S is less expensive, offers more interior space, is rave reviewed rather than slated by the media and generally a better performing, better handling and more attractive vehicle.

    Even Karma's most important distinctive feature-its range extender- doesn't give it the edge a car like the Volt has over the Leaf because the combination of large battery packs and the supercharger network goes a very long way in solving the range issue. It actually works against it I think, making the vehicle heavy, noisy in extended range mode and cramped on the inside.

  4. According to an article on both Geely and Dongfeng backed away from Fisker because they don't own the technology that powers the Karma.

    If Fisker bankrupts and defaults on their DoE loan I'm sure we're going to experiance a backlash against green technology.....again. I hate to put pressure on Tesla, but their success is very very important we need Tesla to carry the torch for independent green automakers.

  5. That is exactly the problem with those "startups". They have NOTHING in IP worthy of buying.

    Companies such as CODA and Fisker are bounded to fail b/c they are nothing more than contract manufacturer who assemble cars. They don't have any significant IP in design and they don't hold key design innovations over other major automakers.

    I think Tesla will be fine since its design are unique and more advanced.

  6. They should pick up both Fisker and Coda. Then they might have some IP worth something together.

  7. What does Fisker or CODA has that is worthy of any money to buy?

    Fisker's engine is from GM, it is electric motors are off the shelf. The battery is from A123 now part of a Chinese company. Its series design is no more advanced than the Volt.

    Coda? even less value. At least the Fisker has a somewhere distinct styling and it at least performs decently...

  8. I read all these baseless and uninformed comments. I am a Fisker owner and driver. If you have not driven one, then you have no right to comment on the car or technology without doing due diligence. But then we are all to blame to read headlines and make a judgement based on superficial news. When you guys attack an innovative company like Fisker, you attack the employees, the customer, the suppliers, the dealers and the entire value chain. So folks, I would urge you to think before you write superficial comments.

  9. @Laura: Just to confirm, your criticism is in regard to the comments, and not to the article itself?

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