Fisker Inc. to Sell Remaining Ocean SUVs for $46.25 Million in Bankruptcy Deal
A Delaware Bankruptcy Court judge has approved Fisker Inc.’s request to sell its remaining inventory of Ocean SUVs in a bulk transaction valued at up to $46.25 million. The electric vehicle startup, which has faced significant financial challenges, filed for Chapter 11 bankruptcy protection in June 2023.
Bulk Sale to American Lease
Earlier this month, Fisker revealed in a court filing that it had secured a buyer for approximately 3,200 unsold Ocean SUVs tailored for the North American market. The buyer, American Lease, is an electric vehicle leasing company catering to ride-hailing services in New York City.
Key Points of the Deal
- Immediate Cash Flow: Fisker argued that the sale is essential for maintaining basic business operations, including payroll.
- Initial Deliveries: Fisker plans to deliver around 1,000 vehicles to American Lease by Friday, generating approximately $14 million in revenue.
- Subsequent Sales: Another 500 vehicles, valued at around $6.7 million, will be sold next week.
Background on Fisker Inc.
Henrik Fisker, a renowned car designer, founded Fisker Inc. in 2016, marking his second venture into the automotive industry. The company launched the Ocean SUV last summer but failed to gain significant market traction. By the time it filed for bankruptcy, Fisker had produced roughly 11,000 Oceans.
Legal Complications and Judge’s Decision
The Office of the U.S. Trustee initially objected to the sale, arguing that Fisker was rushing the process, undervaluing the vehicles, and failing to adequately market them. However, Judge Brendan L. Shannon, who presided over the case, found Fisker’s approach reasonable under its current constraints.
Judge Shannon’s Remarks
- Urgency of Sale: The judge acknowledged the urgency of the sale from a business standpoint.
- Buyer Challenges: He noted the difficulty in finding a buyer willing to accept the vehicles in "as-is, where-is" condition without manufacturer support.
- Remarkable Deal: Judge Shannon described the deal as "miraculous" given Fisker’s resource and time limitations.
Support from Creditors and Concerns of Existing Customers
Fisker’s creditors have backed the deal, which also includes provisions to address the concerns of current Fisker Ocean owners. The Fisker Owners Association, representing 2,500 Ocean buyers, successfully lobbied for certain additions to the sale agreement.
Provisions for Existing Owners
- Service Information: Fisker will take "commercially reasonable steps" to provide service information to current owners that it is also giving to American Lease.
- Software and Parts Updates: The company will ensure software updates and the availability of parts.
- Recall Remedies: Fisker committed to addressing existing vehicle recalls.
Despite these assurances, owners continue to express concerns about software maintenance, parts availability, and recall repairs. Recently, Fisker issued a stop-sale order due to a defective cooling pump that requires replacement on every Ocean.
Financial Details of the Deal
Under the terms of the agreement, American Lease will pay:
- $16,500 for new Oceans in good condition (covering around 2,711 vehicles).
- $2,500 for damaged vehicles.
- $3,200 for previously titled vehicles.
The average sale price across all vehicles comes to roughly $14,000 per Ocean. This is significantly lower than the original retail price range of $39,000 to $70,000. It is also less than the reduced pricing Fisker had previously announced to boost sales.
Judge’s Final Approval
Judge Shannon stated that he would finalize the sale as soon as Fisker submits a revised version of the proposal.
Conclusion
Fisker Inc.’s ability to secure this bulk sale is a crucial step in navigating its bankruptcy crisis. While existing customers have expressed valid concerns, the provisions included in the sale agreement aim to mitigate some of these issues. This deal also provides a lifeline for Fisker, enabling it to continue basic operations while addressing its financial challenges.
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William Kouch, Editor of Automotive.fyi
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