A bankruptcy judge has approved Fisker’s sale of over 3,000 Ocean SUVs to a vehicle leasing company, a deal expected to bring the defunct EV startup up to $46.25 million. This decision helps move Fisker forward in its bankruptcy process as it continues to liquidate its remaining assets.
The ruling came after Fisker addressed concerns raised by the U.S. Trustee’s office, which argued that Fisker’s legal team and its chief restructuring officer, John DiDonato, had not adequately marketed the inventory for the best possible deal. They also questioned the valuation process and the speed at which the deal was pursued.
In a filing on Tuesday morning, DiDonato detailed that Fisker had reached out to hundreds of potential buyers, including dealerships, rental car companies, taxicab operators, and ride-share leasing companies, before filing for bankruptcy in mid-June. Despite these efforts, the only firm offer came from American Lease, the company now buying the vehicles.
Two other potential buyers showed fleeting interest after the bankruptcy filing, and a competitor found by the committee of unsecured creditors withdrew their offer. Judge Brendan L. Shannon agreed that Fisker had made sufficient efforts to secure the best bid, calling American Lease “functionally a purple unicorn” for not only buying the cars but also agreeing to wait until pending recalls are cleared and to work with the newly formed Fisker Owners Association for spare parts and software support.
In the coming days, Fisker will sell around 1,000 Ocean SUVs to American Lease for about $14 million, with another 500 expected to be sold next week for $6 million. This money will be used to pay the remaining employees working on recalls, software updates, and facilitating vehicle sales.
The allocation of the rest of the money from American Lease remains disputed. Fisker’s largest secured lender, Heights Capital Management, loaned over $500 million to Fisker in 2023. When Fisker missed a financial filing deadline in the third quarter of 2023, it breached a covenant of the deal, leading Fisker to secure the remaining balance by pledging all its assets as collateral. Heights claims this gives them priority on any asset sale.
During Tuesday’s hearing, it was revealed that Heights plans to file a motion to convert Fisker’s Chapter 11 bankruptcy to Chapter 7 liquidation, aiming for an efficient liquidation without the expenses of Chapter 11 proceedings. Negotiations with Heights led to an agreement that the motion would not be filed until at least July 29.
The U.S. Trustee’s office and the committee of unsecured creditors have challenged Heights’ claims in several hearings. However, their priority has been approving the fleet sale to prevent Fisker’s collapse.
Heights’ claims may extend to other assets, including hundreds of millions of dollars worth of factory equipment in Austria. Fisker Austria GmbH, overseeing this part of the business, is in its own insolvency proceeding. DiDonato had to negotiate to include 118 Oceans at the factory and another 480 at a nearby port in Belgium in the sale to American Lease. This negotiation involved the administrators of the insolvency process and Fisker executives.
The next hearings are scheduled for July 22 and July 29. Doug Mannal, a lawyer for the committee of unsecured creditors, emphasized the need for time to make progress without being restricted by Heights’ claims.
