Electric vehicle startup Fisker finds itself on the brink of bankruptcy as it struggles to meet its financial obligations and secure adequate relief from creditors, according to a new report from Reuters and the Daily Mail.
The company disclosed in a recent regulatory filing that it may need to seek bankruptcy protection within the next 30 days if it fails to obtain sufficient liquidity to address its current debt.
The financial troubles at Fisker came to a head when the company missed an interest payment of approximately $8.4 million on notes due in 2026, despite a 30-day grace period.
This setback follows the collapse of talks with a major automaker last month, which had been a potential lifeline for the cash-strapped startup.
As a result, Fisker has been forced to explore various options, including restructuring efforts both in and out of court, as well as pursuing capital market transactions.
Adding to Fisker’s woes, the New York Stock Exchange delisted the company in March due to its shares trading at “abnormally low” price levels.
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This move further underscores the severity of the financial challenges facing the EV manufacturer.
⚠️ FISKER MAY SEEK BANKRUPTCY PROTECTION IN 30 DAYS IF UNABLE TO MEET DEBT OBLIGATIONS
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Fisker may have to file for bankruptcy protection within 30 days if it does not get adequate relief from its creditors and enough liquidity to meet its… pic.twitter.com/pLHPfJ7eZ4
— PiQ (@PiQSuite) April 23, 2024
The company’s cash reserves have dwindled significantly over the past year, with its balance falling from $736.5 million in 2022 to just $325.5 million in 2023.
In an effort to streamline operations and reduce costs, Fisker has already taken steps to downsize its workforce.
As of April 19, the company reported a headcount of approximately 1,135 employees, marking a reduction of 425 positions since the end of December.
Looking ahead, Fisker plans to implement additional measures to improve its financial stability, including further workforce reductions and the optimization of its physical footprint.
In March, the company took the step of cutting prices on its 2023 Ocean SUV models in an attempt to boost sales and generate much-needed capital to meet its debt obligations.
The challenges faced by Fisker are not unique within the EV industry, as intense competition and economic uncertainty have led many potential customers to hesitate on making significant purchases.
With rising borrowing costs and a general sense of financial instability, the demand for big-ticket items like electric vehicles has been impacted.
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Fisker’s ability to secure relief from creditors, streamline its operations, and generate sufficient revenue will be key factors in determining whether it can avoid bankruptcy and chart a path towards a more stable future in the highly competitive EV market.
