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.
“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?
What is the value of buying Fisker? The brand itself is worse than worthless. They don’t own any production capacity. As far as I can tell, they haven’t really developed any truly unique or worthwhile IP.
What is the value of buying Fisker? The brand itself is worse than worthless. They don’t own any production capacity. As far as I can tell, they haven’t really developed any truly unique or worthwhile IP.
Elon trying to pull his best Oprah….
You get a $10 giftcard to Cumberland Farms!!!!
You get a $10 giftcard to Cumberland Farms!!!!
You get a $10 giftcard to Cumberland Farms!!!!
Seriously. I believe Musk about as far as I can throw a Tesla.
Hot cocoa sampler box to hourly workers. Honey baked hams to the people he actually likes.
Their trash (in a good way for taste, probably not health) breakfast sandwiches are underrated. The coffee is weak, but cheap.
I guess what I’m saying is, I’ll take the two free breakfasts if he’s willing to spare.
Elon trying to pull his best Oprah….
You get a $10 giftcard to Cumberland Farms!!!!
You get a $10 giftcard to Cumberland Farms!!!!
You get a $10 giftcard to Cumberland Farms!!!!
Seriously. I believe Musk about as far as I can throw a Tesla.
Hot cocoa sampler box to hourly workers. Honey baked hams to the people he actually likes.
Their trash (in a good way for taste, probably not health) breakfast sandwiches are underrated. The coffee is weak, but cheap.
I guess what I’m saying is, I’ll take the two free breakfasts if he’s willing to spare.
If Magna hasn’t already started retooling, they’re the only company that might even consider the purchase. But they might do better starting with something with less baggage if they want to start their own company. That said, if they buy the rights to the vehicles and change the name, it’s entirely possible that they could rebrand in a way that avoids taking on the reputation.
The factory does also build the G-Wagen, I-Pace, and Z4/GR Supra, so I guess it’s an open question whether Ocean volumes were make or break enough for Magna corporate to expand into a whole new industry and build up a whole new auto sales/marketing operation to keep it all going
I assume they’d make more money retooling to make more things for others, but this could be their chance to make their own with less investment than a clean-sheet approach (and less risk of someone accusing them of IP theft).
But I agree, they probably don’t want to take over. They’re just the only company for which the purchase isn’t just entirely wrong.
If Magna hasn’t already started retooling, they’re the only company that might even consider the purchase. But they might do better starting with something with less baggage if they want to start their own company. That said, if they buy the rights to the vehicles and change the name, it’s entirely possible that they could rebrand in a way that avoids taking on the reputation.
The factory does also build the G-Wagen, I-Pace, and Z4/GR Supra, so I guess it’s an open question whether Ocean volumes were make or break enough for Magna corporate to expand into a whole new industry and build up a whole new auto sales/marketing operation to keep it all going
I assume they’d make more money retooling to make more things for others, but this could be their chance to make their own with less investment than a clean-sheet approach (and less risk of someone accusing them of IP theft).
But I agree, they probably don’t want to take over. They’re just the only company for which the purchase isn’t just entirely wrong.
Given how Adobe operates that might as well just be one subscription to the Creative Cloud suite.
Nah, it’s mostly the cancellation fee.
Came here to make a snarky joke about the cancellation fees, given the DOJ/FTC lawsuit… That debt should go up 50% with the cancel fees…
While I’m sure they had plenty of Creative Cloud licenses, most of that money was probably for Marketing Cloud
Given how Adobe operates that might as well just be one subscription to the Creative Cloud suite.
Nah, it’s mostly the cancellation fee.
Came here to make a snarky joke about the cancellation fees, given the DOJ/FTC lawsuit… That debt should go up 50% with the cancel fees…
While I’m sure they had plenty of Creative Cloud licenses, most of that money was probably for Marketing Cloud
Magna has had dreams of being a proper OEM car company for a while, offering to buy GM’s Opel/Vauxhall operation before it was eventually sold to PSA.
Magna has had dreams of being a proper OEM car company for a while, offering to buy GM’s Opel/Vauxhall operation before it was eventually sold to PSA.
Nobody should buy Fisker. The cars are a failure (again) so there is limited value here.
Yeah, both iterations of Fisker have been failures. Perhaps Fisker II will rename as Ocean and Henrik will go on to found Fisker III. Third time’s the charm.
Nobody should buy Fisker. The cars are a failure (again) so there is limited value here.
Yeah, both iterations of Fisker have been failures. Perhaps Fisker II will rename as Ocean and Henrik will go on to found Fisker III. Third time’s the charm.
Karma should buy Fisker, then the circle will be complete
Karma should buy Fisker, then the circle will be complete
Akio Toyoda Survives, But Toyota Execs Grilled By Shareholders
Must have been one hell of a barbeque.
I have yet to try Japanese BBQ.
You need a pretty big hibachi to grill an entire executive.
At least they are smaller than American executives!
Akio Toyoda Survives, But Toyota Execs Grilled By Shareholders
Must have been one hell of a barbeque.
I have yet to try Japanese BBQ.
You need a pretty big hibachi to grill an entire executive.
At least they are smaller than American executives!
……..accused Chairman Akio Toyoda of spending too much time on motorsports as his personal “hobby.”
Alternatively, every Board of Directors of an automotive company should MANDATE participation in motorsports activity. I would love to see John Force running GM or Ford. (He would be overqualified for Stellantis).
As opposed to non-automotive hobbies?
Speaking of mandatory hobbies, I am now Elon Musk to announce an annual 22 mile Walk of Health for all Tesla employees except himself (seems in character)
……..accused Chairman Akio Toyoda of spending too much time on motorsports as his personal “hobby.”
Alternatively, every Board of Directors of an automotive company should MANDATE participation in motorsports activity. I would love to see John Force running GM or Ford. (He would be overqualified for Stellantis).
As opposed to non-automotive hobbies?
Speaking of mandatory hobbies, I am now Elon Musk to announce an annual 22 mile Walk of Health for all Tesla employees except himself (seems in character)
I could see Wanxiang buying what’s left of Fisker (again), and roll the Ocean into their Karma brand, giving them a volume SUV offering that they probably desperately need.
I could see Wanxiang buying what’s left of Fisker (again), and roll the Ocean into their Karma brand, giving them a volume SUV offering that they probably desperately need.
Maybe VinFast would be interested….
Now there’s a possibility! Would these two dumpster fires cancel each other out and end up with decent vehicles, or would they merge into a black hole of hot garbage?
Black hole, two wrongs don’t make a right.
Or in this case, the combination of two wrongs would eliminate both of them, creating one larger right in the automotive world.
Maybe VinFast would be interested….
Now there’s a possibility! Would these two dumpster fires cancel each other out and end up with decent vehicles, or would they merge into a black hole of hot garbage?
Black hole, two wrongs don’t make a right.
Or in this case, the combination of two wrongs would eliminate both of them, creating one larger right in the automotive world.
Well I was gonna say Trump, but since Fisker is already bankrupt is would be no fun for him.
So, now the seats can grab you by the…..?!?!?
Genius.
It would fit with the model of his casino business – buy failed projects started by someone else, put his name on them and finish them, then fail again because they were a bad business idea to start with. See also Eastern Airlines Shuttle/Trump Air Shuttle
Trump Steaks, Trump University, Truth Social, etc.
Well I was gonna say Trump, but since Fisker is already bankrupt is would be no fun for him.
So, now the seats can grab you by the…..?!?!?
Genius.
It would fit with the model of his casino business – buy failed projects started by someone else, put his name on them and finish them, then fail again because they were a bad business idea to start with. See also Eastern Airlines Shuttle/Trump Air Shuttle
Trump Steaks, Trump University, Truth Social, etc.
What would be in it for someone to buy Fisker as an intact company? Their manufacturing was done by Magna Steyr, their batteries were made by CATL, and I don’t believe they own their own trademark (think Henrik Fisker has that under a separate LLC and licenses it to Fisker Inc). Their sales network, maybe, but is that likely to stay intact? Would seem leases are going to get voided during the bankruptcy process and staff is definitely going to be laid off, not that they had a great retail network to start with
Are they really sitting on some amazing patents that are way beyond what any established automakers already have or could easily develop themselves?
Does somebody out there really like the Ocean and want to pick up the design and slap their own name on it?
At any rate, it seems like liquidating the company and letting interested parties cherry pick specific assets is what’s going to happen. It’s kind of hard to visualize Fisker staying intact in any recognizable way
The only company that I could see considering buying it would be Magna. They can already produce the vehicle, so buying the rights might be worth something if they felt like selling it themselves.
But I don’t think it’s worth it. They have plenty of other things to use the production lines for and they probably don’t want the hassle.
Yeah, it would be like how some shopping mall owners have rescued bankrupt retail chains just to keep their facilities active and occupied. Or like AM General rescuing Vehicle Production Group.
Magna has expressed interest in becoming more of a full-fledged automaker in the past, during GM’s bankruptcy, they looked into buying a majority stake in Opel, and I think had some interest in Chrysler at one time. But this may be too much rebuilding from scratch required for them to bother, depends on how badly they need to preserve production volume at the factory
Right. They seem to have nothing to offer. No factory. No specific tech you’d want to use in your models. It isn’t like Cadillac is going under and the brand name has value. Fisker? That move the needle for anyone?
Yeah, maybe the Alaska is a cool design. Buy that for $5 at the liquidation sale. The Ocean is a generic CUV. Every brand already has one.
I think you just figured out what they owe Adobe for, since the Alaska exists primarily as Photoshop renders.
Yup, its not like the brand name is worth anything at this point.
Nope. Although I did just confirm, they do actually own that, most of the relevant trademarks are owned by Fisker Inc’s California corporation, while their Delaware corporation apparently has their model name registrations (Pear, Alaska, etc)