Fisker Teeters on Edge of Bankruptcy, Eyes Rescue Plans for Survival

Apr 24, 2024 04:01 AM EDT

CARS AHEAD ON ROAD — (Photo : PEXELS/Taras Makarenko)

Investors received sobering news from Fisker Inc. regarding plans for additional layoffs and the possible need to file for bankruptcy. This most recent statement only serves to exacerbate the company's already daunting issues as it struggles with unstable finances and tries to steer clear of troubled waters. Fisker's admission that it would file for bankruptcy highlights how dire its financial problems are.

Bankruptcy

Reuters reports that if Fisker does not receive sufficient relief from its creditors and sufficient liquidity to complete its obligations, it may have to apply for bankruptcy protection within 30 days. This revelation came in a regulatory filing on Tuesday, underscoring the precarious financial situation the company finds itself in.

Furthermore, Fisker revealed that, despite a 30-day grace period, it had failed to pay interest on a portion of notes due in 2026 totaling around $8.4 million. This blow adds to the increasing doubts around the firm, especially after talks about a possible investment with a big carmaker broke down last month.

Following this outcome, Fisker is now looking into a number of measures to manage its financial difficulties, including capital market transactions and both in- and out-of-court restructuring possibilities.

To further emphasize the severity of its situation and the necessity of taking immediate action to safeguard its future, the business delisted from the New York Stock Exchange in March, citing "abnormally low" trading levels for its shares.

In February, the company, having alerted to the risks of its viability, has been contending with fierce competition alongside a situation where consumers are hesitant to make significant purchases due to elevated borrowing expenses and economic instability.

Cutting Workforce

According to SFGate, Fisker stated that it planned to further streamline operations by cutting employees and real estate holdings. This action is a component of the business's continuous attempts to resolve its financial issues and maximize its resources.

With the statement, Fisker adds its name to the increasing number of businesses making steps to adjust to shifting market conditions and set themselves up for long-term viability. Reducing its employment and real estate footprint further demonstrates the company's resolve to increase efficiency and adaptability in the face of changing market conditions.

Henrik Fisker, co-founder of the company, witnessed his prior automotive endeavor undergo bankruptcy proceedings in 2013. The former venture, known as Fisker Automotive, also depleted over $1.4 billion in funds during its operation.

According to TechCrunch, Fisker's global workforce stood at 1,135 individuals as of April 19, as stated in the filing. This marks a decrease from 1,560 at the conclusion of 2022 and approximately 1,300 by the end of September 2023. Additionally, the company announced its intention to scale back its physical presence.

These developments follow Fisker's revelation on Monday evening of the departure of a second member from its board of directors, with the first departure occurring at the close of March. Furthermore, Fisker has appointed a chief restructuring officer tasked solely with overseeing the approval of the company's budget and the decision-making process regarding any potential sale of its business.