Fisker (OTCMKTS:FSRNQ) has encountered some turbulence as it tries to liquidate its supply of unsold electric vehicles (EVs). Indeed, the U.S. Trustee Program, a Justice Department branch tasked with regulating the bankruptcy system, has objected to the company’s proposed EV sale. What does this mean for Fisker stock?
Well, if today is any indicator, nothing good. Fisker is down more than 3% at the time of writing, though that’s something of a drop in the bucket considering the stock’s 99% losses this year.
Indeed, the EV maker declared bankruptcy earlier this year and has since been on a hunt to find buyers for its remaining stockpile of Fisker Ocean SUVs as a means of paying creditors and bankruptcy costs.
Currently, the company is working on a deal with American Lease, which services ride-hail drivers in New York City. Should the deal go through, it would provide Fisker with about $46 million and would result in all of its remaining Ocean EVs being sent to American Lease. It’s this sale that the U.S. Trustee is objecting.
Fisker Stock Continues to Tumble Amid Legal Snafu
According to the U.S. Trustee, the sale should be denied for three major reasons:
- The sale lacks a valid business justification.
- The proposed purchase price of the vehicles is unfairly low, compared to how much they could be sold for utilizing “adequate marketing.”
- Fisker failed to provide adequate notice of the sale motion and attempted to rush the sale by setting an emergency hearing the day prior to the July 4th holiday.
Predictably, Fisker’s lawyers disagree with the U.S. Trustee’s reasoning:
“The Committee believes that the [Ocean SUVs] were adequately marketed, that the Fleet Sales Agreement constitutes the highest and best offer for the [Ocean SUVs] that [Fisker] could secure under the circumstances, and that the Sale Transaction maximizes the value of the Debtors’ estates for the benefit of all stakeholders.”
A hearing in Delaware Bankruptcy Court is set for today which will determine whether the sale will be approved.
Unfortunately, regardless of the outcome, Fisker stock remains a cautionary tale on Wall Street. Fisker’s future is uncertain after it was kicked off most major trading indexes for failing to meet the minimum bid price.
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On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
