Automobile companies have been battling the electric vehicle industry's leader Tesla (TSLA) for EV sales in a tough market. Companies sold about 1.2 million electric vehicles in the U.S. in 2023 or only about 7.6% of all vehicle sales, according to Kelley Blue Book.
Competing for that small piece of the auto sales pie has been difficult for many EV makers, leading some to file for bankruptcy.
Related: EV startup reaches the end of the road in bankruptcy case
Lordstown bankruptcy confirmed
Lordstown, Ohio-based EV maker Lordstown Motors in July 2023 filed for Chapter 11 bankruptcy to restructure and sell its assets, and after over seven months of reorganization, the debtor won confirmation of its Chapter 11 plan on March 5 and was set to emerge from bankruptcy.
Companies are having problems overseas as well. Arrival, a British manufacturer of EVs, in February entered administration, the U.K. version of bankruptcy, without ever selling a car. The company had plans to market a large van, a bus and vehicles for ride-hailing companies, but did not have any sales.
An important EV infrastructure provider in the U.S. also fell into bankruptcy with hopes to emerge a stronger company.
Charging station maker will hand company to its lender
Electric vehicle charging station manufacturer Charge Enterprises on March 7 filed for a prepackaged Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, with a restructuring support agreement and plans to hand 100% ownership of the company to prepetition lender Arena Investors, after the debtor in November 2023 was unable to redeem about $9.9 million of its assets from investment adviser Korr Acquisitions Group because of an alleged breach of fiduciary duties.
Korr had also refused to purchase $5 million in Charge common stock under a securities purchase agreement entered into on Aug. 11, 2023, court papers said.
The shortfall created by the withholding of the investment funds and Korr's refusal to purchase the stock prevented Charge from making payment on $25.8 million in non-convertible notes owed to Arena that matured on Nov. 19, 2023, according to court papers. Arena in November sent the debtor letters of default.
The New York-based debtor on Jan. 8, 2024, had filed a lawsuit against Korr and its founder Kenneth Orr in the Supreme Court of New York alleging breach of fiduciary duties, unjust enrichment, constructive trust, conversion, fraud in the inducement and other claims. Charge seeks equitable relief, a temporary restraining order and injunction against any further dispersal or movement of Charge's assets and damages in excess of $15 million.
The debtor listed $114.3 million in assets and $48.7 million in liabilities in its petition.
Prior to filing Chapter 11, Charge hired Piper Sandler in January 2024 to seek a sale of all of the debtor's operating non-debtor subsidiaries through a bankruptcy sale of the equity of its broadband and wireless, electrical contracting services, electric vehicle charging and fleet services.
The debtor, however, decided that pursuing a prepackaged bankruptcy with a sale to its lenders was in its best interests, court papers said. Under the prepack, the debtor would also seek $10 million in debtor-in-possession financing from its prepetition lenders, with immediate access to $4 million on interim order approval and the remaining $6 million available on final DIP order.
Under the prepack, Arena would receive 100% of the new reorganized debtor's common stock, with general unsecured claims unimpaired, but preferred and common equity would not receive any allocation. The debtor is seeking a prompt confirmation of its Chapter 11 plan on April 24, 2024, or as soon as practical thereafter, according to court papers.
Charge had been expanding its business in 2023, as it on Aug. 1 revealed that it purchased Greenspeed Energy Solutions, a provider of charging infrastructure, solar and energy storage, for a price up to $15 million.
Subsequently on Aug. 28, Stellantis (STLA) reached an agreement with Charge for it to become an EV charging installation partner for the Big 3 auto company's 2,600-plus U.S. dealer network.
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