News Story: Is Fisker Going Bankrupt?

Fisker bankruptcy - Spalding & Spalding

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Today’s economy seems pretty unstable. There have been a lot of changes over the last few years. If you’ve been keeping up with the news, you’ll know that it isn’t just individuals who have felt the negative effects. Businesses, even large businesses, have been struggling as well. Some well-known companies have even faced bankruptcy. One company that may be facing bankruptcy in the very near future is Fisker, the electric car manufacturer. Anita Campbell reports on Fisker’s state in “Green Car Maker Fisker Considering Bankruptcy, Taxpayer Loan At Risk.”

Campbell opens her article with, “Electric car maker Fisker is a study in how a startup can quickly implode on itself – and likely take almost $200 million in taxpayer money down the drain with it.”1 If you haven’t stayed up to date with the goings-on at Fisker, here’s a brief summary:

In 2010, a loan to Fisker from the Department of Energy for $193 million was announced; this was to encourage green car production.

In 2011, the Department of Energy ceased disbursing the loan because the company failed to meet set milestones.

In October 2012, Fisker lost 320 vehicles at a New Jersey port due to Hurricane Sandy. This came up to $32 million that an insurance company later refused to reimburse the company for.

In March 2013, the Executive Chairman and the individual the company was named for, Henrik Fisker, resigned.

In April 2013, Fisker terminated 75% of its staff (according to Reuters). Employees who were let go filed a class action lawsuit saying that Fisker violated the Federal WARN Act by not giving them sufficient notice of the impending termination.

Talks with Chinese automakers went nowhere.

In April 2013, reportedly, Fisker hired a bankruptcy lawyer.

The question is, what is happening with Fisker? Why is this startup basically, by all appearances, crashing and burning? According to Campbell, one of the big problems is that Fisker doesn’t own a lot of the technology used in their electric car. They have to go to outside suppliers to get much of their core technology. This leaves them open to shortages or price hikes—both of which are outside of their control.

Another issue has been some bad publicity. The Fisker test car actually broke down on the track while being reviewed by Consumer Reports. Not a good sign when you’re asking people to spend a lot of money on a car. That leads into the third issue…Economic times are tough, and the only model produced, the Karma, is a $100,000 car. Definitely not an affordable consumer choice.

What may be the final straw for Fisker? A $10 million taxpayer loan payment due on April 22nd.


About Wallace Spalding

Wallace Spalding has concentrated in Bankruptcy Law for over 25 years–helping people relieve the burden of debt and getting the results they deserve. He has been recognized as one of Louisville’s Top Lawyers in Louisville magazine in 2008, 2009, 2011, and 2012. Wallace Spalding's Google+ Profile

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