The Battle for Fisker’s Assets Intensifies

By Akash Sriram From the Reuters

Fisker Inc’s recent Chapter 11 Bankruptcy filing intensifies debate on proper handling of company’s assets

Fisker Automotive, which filed for Chapter 11 bankruptcy only several days ago, has got itself into an unhappy round of disputes regarding the assets as some reportations accused the company of sale of some of the assets outside the apron of the bankruptcy court.

After Fisker recorded declining revenues and threatened with bankruptcy, it drew more than $500 million from Heights Capital Management in 2023 in the form of loans which were secured using future assets after violating the terms of financial covenants.

Specifically, the largest and dominant secured creditor, Heights Capital Management, has now gained the most control over Fisker’s business and other resources as well as controls outcomes of the bankruptcy processes.

This raised the ire of Alex Lees, the counsel for the unsecured creditors comprising of the over $600 million lost, which accused Fisker of engaging in “suspect activity” whereby he dissolved his assets soon after bankrupting the company, but before the courts could take action; Heights.

Scott Greissman the representative from Heights dismissed claims of impropriety in his behavior dismissing them as hearsay and mere attempt at getting publicity. In response to Noah, he highlighted how Heights had provided credit of over $1bn to Fisker and said even if the EV maker clears the remaining models of Ocean SUVs, the credithold ratio would be potentially modest.

Fisker is indeed set to sell the presold but as yet unsold cars, a total of 4,300 units of Ocean SUVs to a leasing company. Still, doubts have been raised about the sufficiency of the proceeds from asset sales to meet creditors, with the estimated worth anywhere between $500 million to $1 billion, and consisting largely only of manufacturing equipment.

In his remarks, Judge Thomas Horan pointed out that the case was rather sophisticated, and its handling involved numerous filings, yet he applauded all parties on their efficient performance in the trial.

The next hearing is scheduled for June 27 and the court motion is going to expand upon the sale of assets as well as the ongoing conflict between creditors and other claimants.

The important conflicts of interest that emerged before Fisker’s bankruptcy, particularly with regard to assets management and filing time, are important to note here. The effects of outcomes, once achieved in the case, would offer a valuable reference for Heights and other unsecured creditors in recovering their investments and thereby improve upon future cases of bankruptcy and fiscal restructuring in similar cases.

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