In a hearing on Tuesday, a Delaware Bankruptcy Court judge granted Fisker's motion to sell off its remaining inventory of Ocean SUVs in a bulk deal worth up to $46.25 million.
Earlier this month, the troubled electric vehicle startup said in a filing that it had found a buyer for the roughly 3,200 unsold Oceans that are configured for the North American market. The buyer, American Lease, leases out EVs to drivers for ride-hailing services in New York.
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Fisker Inc. is the second automotive startup from renowned car designer Henrik Fisker. The company was founded in 2016, began selling the Ocean SUV last summer and struggled to get its business off the ground. It filed for Chapter 11 bankruptcy in June, after producing around 11,000 Oceans.
Fisker argued that the sale was crucial for bringing in cash that it could put toward basic business functions like payroll. In Tuesday's hearing, a lawyer for Fisker said the company would be able to deliver roughly 1,000 Oceans to American Lease by Friday, bringing in some $14 million. It plans to sell another 500—worth around $6.7 million—next week.
The company filed for Chapter 11 bankruptcy protection in June, just about a year after it started delivering the Ocean, its debut model. It faced a litany of struggles, including a troublesome vehicle, a lacking service operation and, reportedly, mismanagement.
The Office of the U.S. Trustee, a part of the Justice Department that oversees the administration of bankruptcy cases, initially objected to the sale. In a recent filing, its lawyers argued that Fisker was trying to rush through a sale, that the price it had landed on was too low and that it hadn't appropriately marketed the fleet to find potential buyers.
Judge Brendan L. Shannon, who presided over Tuesday's hearing, said Fisker had allayed those concerns. He agreed with Fisker's position that a sale is urgent from a business standpoint. He also agreed with the startup that finding a buyer willing to accept the vehicles in "as-is, where-is" condition and maintain them without manufacturer support was a challenging task.
"In some ways, it may be regarded as miraculous that a deal came together at all,” he said, given Fisker's resource and time constraints.
Importantly, the deal also won the backing of Fisker's creditors.
Existing Fisker customers fear that parts, service and software updates will be difficult or impossible to come by in the future if the company fully ceases to operate. The Fisker Owners Association, a group of 2,500 Ocean buyers, successfully argued for some additions to the sale order aimed at smoothing out the ownership experience.
The latest version of the proposed sale order states that Fisker will take "commercially reasonable steps" to provide owners service information it's also giving to American Lease; provide software updates and parts; and remedy existing recalls. Fisker and American Lease "shall engage in good faith negotiations with the Fisker Owners Association with respect to access and availability to spare parts and supplies, as applicable," the proposed order reads. The order being approved will be a big win for existing owners.
Still, a lawyer for the association said Tuesday, owners continue to have "grave concerns" around software maintenance, parts availability and Fisker's ability to perform recall-related repairs on their cars. Fisker recently issued a stop-sale order related to a defective cooling pump that needs to be replaced on every Ocean.
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Under the terms of the deal made public earlier this month, American Lease has agreed to pay $16,500 for brand-new Oceans in good working order, which Fisker said it has around 2,711 of. The company will pay $2,500 for damaged vehicles and $3,200 for previously titled ones. The math comes out to an average of roughly $14,000 per Ocean.
That's significantly less than the $39,000-$70,000 that Oceans cost when new. It's also less than the fire-sale pricing Fisker announced earlier this year in a bid to boost sales. American Lease will also get access to the proprietary software systems needed to maintain and update its fleet of Oceans.
The judge overseeing the case still needs to enter the final order approving the sale, which he said he would do as soon as Fisker uploads a revised version of the proposal.
Contact the author: tim.levin@insideevs.com
