Fisker Bankruptcy Shows It Owes Millions To Adobe, Google, And NBC Universal

Trouble electric car startup Fisker filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court, District of Delaware late last night. This is merely the first in a long series of actions the company will need to take to eventually exit bankruptcy, likely under new ownership, but there’s still something to learn from this initial filing.

Welcome to a Delaware-themed installment of The Morning Dump, focused today a little more on the C-Suite than the C-pillar. Up first, a look at the unsecured creditors that Fisker owes money to, including Adobe. I’ll then chat a bit about the secured creditors and who, in the end, could end up owning the company.

Akio Toyoda survived an attempt on his Toyota Chairmanship, though even the discussion was a fairly unusual occurrence for a Toyota shareholder meeting and a sign that Japan’s corporate environment is beginning to change. Elon Musk also survived his own shareholder meeting, this time many billions of dollars richer, and it sounds like Musk is ready to spread some wealth around to employees.

Here Are Fisker’s 20 Biggest Unsecured Creditors

In what was seen as a rapidly expanding electric car market, Fisker’s version of contract manufacturing seemed like it had the possibility of success. Electric carmakers like Tesla, Rivian, and Lucid were all enjoying big share prices when Fisker went public via a SPAC.

A sudden price war, the Inflation Reduction Act, software issues, parts shortages, cripplingly bad reviews, and alleged mismanagement all conspired to doom Fisker to inevitable bankruptcy as the money it was earning from selling discounted Fisker Oceans was clearly not going to be enough to cover the company’s mounting debts and interest payments.

When a company files for bankruptcy it has to tell a bankruptcy court who, exactly, is owed money. As this is a Chapter 11 bankruptcy, Fisker had to list its biggest unsecured creditors. These are people who don’t own any of the company or have any claim to any equity. A redacted version of the initial bankruptcy petition can be seen here via Reddit, and in it the 20 biggest unsecured creditors are listed.

You might be surprised to find out that the biggest creditor is Adobe, the company behind products like Photoshop and Premiere. Did Fisker just have a bunch of Photoshop licenses? Unlikely. Instead, Fisker lists “IT/Software” as the category for the $2,045,952.21 unsecured claim, which could include any number of back-end IT services including CRM and marketing. In this same category is Salesforce, which is owed $527,652.43.

As part of my job, I have to keep on top of who is spending what in the marketing space, and last year I couldn’t help but notice that Fisker was listed as having spent millions of dollars on digital advertising. You may have seen their ads on any number of car or lifestyle websites. Some of this was probably purchased via Google, which is why Google is owed $1,237,811.31. The same goes for NBC Universal, which is owed $649,999.97 for ads (I guess $650,000 was too much?).

The rest of the unsecured creditors are the typical companies you’d expect for a car company, including suppliers like I.G. Bauerhin (electronics) and Vector North America (vehicle electronics). Also on the list are FedEx for shipping and Manpower for what’s listed as “professional services,” which I assume is staffing-related.

Chapter 11 means the company will continue to operate and Fisker itself said it will continue with reduced operations, including “paying employee wages and benefits, preserving certain customer programs, and compensating needed vendors on a go-forward basis.”

So that’s the unsecured creditors. What about the secured ones?

Who Should Buy Fisker?

Fisker said last night that it was “in advanced discussions with financial stakeholders regarding debtor-in-possession financing and the sale of its assets.”

That first part is easy to explain. Because it’s in Chapter 11 and Fisker wants to keep at least minimally operating as a company it needs money to operate and may seek financing in order to get that money. And what of the “sale of its assets”? Who will end up with Fisker?

Previously, it was reported that Fisker had been asked to initiate massive layoffs on behalf of an investor that, from reports, appears to be Heights Capital Management, itself a subsidiary of massive trading firm Susquehanna International Group, or SIG. Does SIG want to operate a car company? Like most major financial firms, my guess is probably not.

Who else, then? The company that was responsible for building the cars was Magna and they, too, seem to be one of the larger secured creditors. As we previously reported, the company had this to say in its quarterly investor call last month:

We fully impaired our operating assets and warrants in the first quarter totaling $294 million. We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in Q1. This amount will be recognized in income as performance obligations are satisfied or upon termination of the fiscal contract manufacturing agreement.

Fisker says that it owes about $100-$500 million to somewhere between 200-999 secured creditors. Fisker also said it has between $500,000 million and $1 billion in assets. Just doing the math, it sounds like Magna at least thinks it’s owed a big chunk of what’s there for building cars, though it’s not yet clear what assets Fisker has to repay the company.

While Magna is more of a white-label constructor for car companies, perhaps Magna wants to have a public-facing brand. This could be an easy way to create a new car company for Magna and help it move beyond contract manufacturing. I’m not sure it would be worth it, but that’s one option.

Another option is Renault Nissan, which was reportedly in advanced talks to buy the Fisker Alaska truck platform in exchange for giving Fisker some much-needed cash. Now that Fisker is in bankruptcy it’s possible that Nissan could swipe the company at a discount and just rebrand everything as Nissan.

And, finally, a random investor could decide it’s a good time to be in the EV business and buy the company.

Akio Toyoda Survives, But Toyota Execs Grilled By Shareholders

I’ve used this space to talk briefly about cross-held shares and how the unwinding of the practice (basically, companies owning shares in other companies they do business with) is indicative of a change in Japanese corporate norms. Specifically, the chummy relationship between execs made it harder for even large outside investors to sway the goings on of a company. This is changing and Toyota, after setting record profits, had to face some difficult questions at its annual shareholders meeting.

While Akio Toyoda, former CEO and current board chair, was easily re-elected in spite of a campaign to unseat him, the company’s board was hit with some static.

Hans Greimel went and had this to report:

Shareholders at the June 18 gathering here hit out at Toyota for its ongoing safety testing and certification scandal, grilled the board about its oversight and even accused Chairman Akio Toyoda of spending too much time on motorsports as his personal “hobby.”

“Is the internal control and government not functioning?” the one shareholder asked.

He said he was “astounded by the news” earlier this month that Toyota had been tripped up in the same kind of misconduct that embroiled other Toyota Group companies.

C’mon, you can’t hate on the motorsports stuff! Most car execs probably waste their time playing golf or tennis or something boring like that. Motorsports is sports… with motors.

Musk Says He’ll Give Spot Options To High-Performing Folks

People have a lot of feelings about Elon Musk and, you know, trust-but-verify, but shortly after being handed a massive paycheck from investors he’s reportedly turning around and offering stock grants to employees who do stellar work.

Per Reuters:

“Over the next few weeks, Tesla will be doing a comprehensive review to provide stock option grants for exceptional performance,” Musk said in an email, according to the two people who reviewed it and are based in China and the U.S., respectively. They declined to be named as the memo is for internal use.

“There will also be an ongoing program to award spot option grants for anyone who does something outstanding for the company. Thanks for everything you’re doing to make Tesla successful,” the email said.

Neat.

What I’m Listening To While Writing TMD

I was going to call Car Seat Headrest a post-punk band because post-punk is just the term I use for any band that’s harder than Enya but softer than Rancid. In reality, Car Seat Headrest is over-the-plate Indie Rock, whatever Indie Rock is. Labels are meaningless! It’s a great song.

The Big Question

Who should buy Fisker?