Just days before a judge was set to decide whether or not to approve the sale of Fisker Automotive to Hybrid Technologies LLC, another Chinese company is stepping up to bid on the luxury car manufacturer.
Wanxiang America Corp., China’s largest auto parts manufacturer, made an 11th hour bid to acquire Fisker Automotive.
Since filing for Chapter 11 bankruptcy protection at the end of November, Fisker has been speeding through a bankruptcy deal with Hybrid Tech, owned by Chinese billionaire Richard Li, with little opposition.
Wanxiang is offering $24.7 million and will assume some of Fisker’s liabilities, according to reports. The company would continue manufacturing cars and move production to Michigan.
Wanxiang has also purchased A123, the bankrupt manufacturer that supplied batteries for Fisker.
Another bankruptcy hearing is set for Friday morning in Delaware. A judge will decide which Fisker sale plan he will approve.
Ilene Slatko, principal of Delaware Shareholder Services, watches bankruptcy hearings on behalf of stakeholders. She said the deal with Hybrid Tech was going unusually fast which could mean the large creditors are in agreement with the bankruptcy sale plan.
“There are creditors who have put sizable amounts into the company,” said Slatko. “My guess is that they’re already on board with this. Because they figured out through the debtors’ attorneys that this is the best they’re going to get.”
However, several objections to the sale have been filed in the past few days which could delay the process.
At one point, Fisker had secured more than half a billion dollars in federal loans and upward of a billion dollars in private investments including those who made investments in the company and those who put down a deposit for a vehicle.
Payments, now and in the future
The state of Delaware also provided the auto manufacturer with millions in loans and grants to help set up for car production at the shuttered General Motors in Newport, Delaware.
Thousands of creditors are listed in court documents and some aren’t letting the luxury auto manufacturer off easy.
New Castle County wants the automaker to pay up the $1.1 million in property and school taxes owed on the Boxwood Plant in Newport. Other companies are owed money for materials and services that were provided but not paid for.
While Fisker doesn’t have many tangible assets left to liquidate, the company did list its $20 million Delaware plant as an excluded item in bankruptcy papers, meaning the company has the option of holding on to the plant, presumably for liquidation.
Other legal action
In addition to bankruptcy, the company is also facing a class action lawsuit filed by former Fisker employees who were laid off earlier this year. Fisker executives are also being sued because they did not disclose the company’s money troubles to potential investors.
Fisker blames the bankruptcy on a number of issues including supply chain disruptions, design delays and the inability to access additional or incremental liquidity. They also claim sales were affected by negative press after the company was forced to recall car’s A123 batteries after cars began catching on fire.
Fisker also claims to have suffered a multimillion dollar loss when 339 Karma’s were destroyed in Hurricane Sandy.