Fisker has been authorized by a bankruptcy judge to sell over 3,000 Ocean SUVs to American Lease, a vehicle leasing company, in a deal worth up to $46.25 million. This approval helps Fisker progress in its bankruptcy process as it continues to liquidate its remaining assets.
The judge’s decision, made during a late Tuesday hearing, followed an objection from the Department of Justice’s U.S. Trustee office. The Trustee argued that Fisker’s legal team and chief restructuring officer, John DiDonato, had not sufficiently marketed the inventory or adequately explained the vehicle valuations.
DiDonato countered these points in a Tuesday morning filing, explaining that Fisker had reached out to “hundreds” of potential buyers before its mid-June bankruptcy filing, including dealerships, rental car companies, taxicab operators, and ride-share leasing participants.
Despite these efforts, American Lease emerged as the only serious buyer. Other interested parties, including a vehicle manufacturer and a company leasing to ride-hail drivers, showed fleeting interest after the bankruptcy filing. Additionally, the committee of unsecured creditors found another potential buyer, but this competitor to American Lease withdrew its offer.
Judge’s Conclusion
Judge Brendan L. Shannon concluded that Fisker and DiDonato had made substantial efforts to secure the best bid. He commended American Lease for agreeing to wait until the four pending recalls were resolved before operating the vehicles and for working with the newly formed Fisker Owners Association to provide spare parts and software support to over 2,500 current owners.
Details of Fisker-American Lease Deal
In the upcoming days, Fisker will sell approximately 1,000 Ocean SUVs to American Lease, generating around $14 million. Another 500 vehicles will likely be sold next week, adding $6 million to the proceeds. These funds will help cover ongoing operational costs, including employee salaries and software updates.
Ongoing Disputes Over Sale Proceeds
However, the allocation of the remaining funds from the sale is under dispute.
Fisker’s largest secured lender, Heights Capital Management, which is affiliated with Susquehanna International Group, loaned more than $500 million to Fisker in 2023.
Although these loans were initially unsecured, Fisker pledged all its assets as collateral after breaching a covenant due to a late third-quarter financial filing in 2023. Heights claims this gives them priority over any sale proceeds.
Chapter 7 Conversion Looms
During the Tuesday hearing, it was revealed that Heights plans to convert Fisker’s Chapter 11 bankruptcy to a Chapter 7 liquidation. The motion will not be submitted for approval until at least July 29, following negotiations with the U.S. Trustee, the committee of unsecured creditors, and other parties. Heights’ legal team emphasized the need for an efficient liquidation process, avoiding the higher costs associated with a Chapter 11 proceeding.
Lawyers for the committee of unsecured creditors and the U.S. Trustee’s office have contested Heights’ claims to Fisker’s assets in multiple hearings. However, the immediate focus has been on approving the fleet sale to prevent Fisker’s total collapse.
Beyond the Ocean inventory, Fisker’s assets include:
- Hundreds of millions of dollars’ worth of factory equipment in Austria, tied up in its own insolvency proceedings
- 118 Ocean SUVs at Fisker Austria GmbH’s factory
- 480 Ocean SUVs at a nearby port in Belgium
Fisker Austria GmbH initially wanted to include these vehicles in its insolvency process, but DiDonato negotiated their inclusion in the fleet sale to American Lease.
Linda Richenderfer, representing the U.S. Trustee’s Office, expressed concern over these negotiations, given Geeta Gupta-Fisker’s fiduciary duty to Fisker Inc. Gupta-Fisker, along with her husband Henrik Fisker, remains employed by the company.
Additionally, Heights has submitted a $1 billion claim on the assets in the Fisker Austria GmbH proceeding.
As vehicle sales to American Lease begin, attention will shift to the next hearings on July 22 and July 29.
Featured Image courtesy of dpa/picture alliance via Getty Images
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