Monday, 28 October 2024
by BD Banks
The automobile industry has faced financial distress in 2024 leading to Chapter 11 bankruptcy filings.
Electric vehicle startup Fisker Group on June 17 filed for Chapter 11 bankruptcy, citing various market and macroeconomic headwinds, and shut down all operations.
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Fisker had begun deliveries of its Ocean battery-electric crossover SUV in 2023 to compete with Tesla, but by February 2024 the vehicle began having various problems. Some of the problems included suddenly losing power, loss of brake power, defective key fobs, and front hoods opening at high speeds. The vehicle also had difficulties with gear shifting.
Related: Another giant auto parts brand files for Chapter 11 bankruptcy
Fisker warned that it may not have enough money to survive the next 12 months in its fourth-quarter earnings report on Feb. 29. Other problems arose as in June, former Fisker employees revealed the company had no plan to stockpile spare parts for Ocean vehicle repairs.
The spare parts problem led technicians and employees to dismantle perfectly good cars to provide spare parts.
Fisker’s bankruptcy journey has come to an end as the debtor avoided converting its case to Chapter 7 liquidation, as its Chapter 11 plan was largely funded by $46.5 million in proceeds from the sale of its fleet of 3,300 vehicles to American Lease, the largest lessor of rideshare vehicles in the New York metropolitan area, according to an Oct. 21 statement by the debtor’s lead counsel Davis Polk.
Fisker’s Chapter 11 liquidation plan was approved by a court order on Oct. 16 and effective on Oct. 17.
Now another automotive company hopes for better luck than Fisker in its Chapter 11 filing.
Radford Motors
The parent company of luxury sports car maker Radford Motors on Oct. 10 filed for Chapter 11 bankruptcy protection, seeking to restructure its debt and seek additional funding through new investors.
More bankruptcy news:
The Newport Beach, Calif.-based automaker’s parent Finest Coachbuilding LLC is led by a group of founders, including television personality Ant Antstead, F1 world champion driver Jenson Button, and CFO Dan Bednarski, who launched the company in 2020.
Related: Bankrupt houseware brand sells assets to lenders, cancels auction
The company’s debut model Radford Type 62-2 sports car, which began production in 2022, is a modern version of the 1969 Lotus 62 race car. The company will only produce 62 models of the vehicle, which are equipped with a 3.5L V6 engine, with 600 horsepower, and reaches 181 mph in 2.9 seconds, according to the company’s website.
The Type 62-2 comes in three trim levels: the Commission, which is custom-built exclusively for each owner; the John Player Special, limited to only 12 vehicles; and the Gold Leaf, with red, white, and gold colors and also a 12-vehicle limited-edition.
Radford also offers a Type 62-2 Track Car Edition, designed after the vehicle in the Pikes Peak International Hill Climb, which is not a road-legal vehicle. The company also will only produce 12 of these vehicles. The price is a hefty $1 million per vehicle and includes personalized race training sessions with Button, CEO Today reported.
The bankruptcy filing comes after a business partner of Antstead and Bednarski in March filed a lawsuit against them in Orange County Superior Court, and another Radford partner filed a separate lawsuit against the pair in July for alleged mismanagement of funds, according to People.
Bednarski claims that a judge has cited insufficient evidence for the mismanagement allegations, Motor 1 reported.
Related: Veteran fund manager sees world of pain coming for stocks