The battle over Fisker’s assets is already heating up


It’s been just days since Fisker began bankruptcy under Chapter 11, and the fight over its assets has already begun, with one lawyer claiming the startup is liquidating assets “outside of court supervision.”

At issue is the relationship between Fisker and its largest secured lender, Heights Capital Management, an affiliate of financial services company Susquehanna International Group. Heights loaned Fisker more than $500 million due in 2023 (with an option to convert that loan into stock in the startup) at a time when the company’s financial crisis was brewing behind the scenes.

That funding was originally not secured by any assets. That changed after Fisker breached a covenant by failing to file its third quarter financial statements on time at the end of 2023. In exchange for forgiving that breach, Fisker agreed to give Heights first priority on all of its existing and future assets, giving Heights a substantial advantage. Heights not only gained the pole position to determine what happens to the assets in the Chapter 11 proceedings, but also gave them the chance to tap a preferred restructuring officer to oversee the company’s slow descent into bankruptcy.

Alex Lees, a lawyer with the Milbank firm representing a group of unsecured creditors owed more than $600 million, said at the first hearing in the proceedings in Delaware bankruptcy court on Friday that it took “too long” to get to this point. He said Fisker’s slow regulatory filings were a “minor technical oversight” that caused the startup to “basically hand over the entire business to Heights.”

“We believe this was a terrible deal for (Fisker) and its creditors,” Lees said during the hearing. “The right thing to do would have been to file for bankruptcy months ago.” He said that in the meantime, Fisker has been conducting an “outside court-supervised liquidation” for the benefit of Heights, which he called “suspicious activity.” Fisker has spent the time before filing for bankruptcy cutting prices and selling vehicles.

Scott Greisman, a lawyer representing Heights’ investment arm, said Lees’ comments were “completely inappropriate, completely unsupported,” and derided them as “crafted as soundbites to be picked up by the media.”

“There could be a lot of disappointed creditors in this case,” Greisman said, “none more disappointed than Heights.” He said Heights owed Fisker “a tremendous amount of debt.” He added later that even if Fisker were able to sell all of its remaining inventory — about 4,300 Ocean SUVs — such a sale “would probably pay off a fraction of Heights’ secured debt,” which currently stands at more than $180 million.

Lawyers told the court on Friday that they have an agreement in principle to sell those Ocean SUVs to an unnamed vehicle leasing company. But it’s not immediately clear what other assets Fisker might sell to provide a return to other creditors. The company has claimed to have assets worth between $500 million and $1 billion, but filings so far have only detailed manufacturing equipment, including 180 assembly robots, an entire underbody line, a paint shop and other specialized equipment.

Lees wasn’t the only one who was concerned about how Fisker filed for bankruptcy. “I don’t know why it took so long,” Linda Richenderfer, an attorney for the U.S. Trustee’s Office, said during the hearing. She also said she was still reviewing new filings late Thursday night and in the hours leading up to the hearing.

He also expressed “great concern” that the case could transition directly to a Chapter 7 liquidation after the sale of Ocean’s inventory, leaving other creditors fighting for the pieces.

Greisman once said he agreed that Fisker “probably took longer than necessary” to apply for bankruptcy protection, and that some of these conflicts “could have been resolved more easily” if the case had started earlier. He even said he agreed with Richenderfer that “even with the sale of the fleet, Chapter 11 may not be sustainable.”

Both parties will meet again on the next hearing on June 27.

Before dismissing everyone, Judge Thomas Horan thanked all parties involved in the hearing for arriving “fairly cleanly” despite the rush of filings this week. He specifically called out the U.S. Trustee’s Office for working under “very difficult circumstances” to bring the case to a conclusion “with a minimum of controversy.”

“I think there are some people who might want to get some sleep now,” he said with a smile as he concluded the hearing.


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