Judge rules Fisker won’t be forced into Chapter 7 liquidation, keeping Ocean owners on the road

Beleaguered EV manufacturer Fisker will not be forced into Chapter 7 bankruptcy—which provides for the liquidation of a debtor’s non-exempt property and the distribution of those proceeds to creditors—a judge in the US Bankruptcy Court in Delaware ruled on Friday.

The court’s ruling, which was sought by owners of the troubled Fisker Ocean EV, will allow current Fisker management to remain in charge for some time as the operation winds down. This will enable the company to liquidate its assets while continuing to work with Ocean owners to keep their vehicles on the road.

“The owners strongly believe that Fisker owes them a responsibility to ensure that their vehicles are safe and operable, and that the best way for Fisker to fulfill that promise is through a Chapter 11 process,” said attorney Daniel Shamah, who represents the Fisker Owners Association. “We can be sure that employees and the advisors who are helping the company do this remain on board.”

The revised liquidation plan is subject to a vote by all unsecured creditors. It calls for the group that represents Ocean owners to have a voice in the sale of Fisker’s intellectual property, which includes the designs and computer code needed to build and operate the vehicles. The owners will also require long-term access to Fisker’s cloud software, which the automaker uses to dispatch over-the-air vehicle software updates.

In the course of the Ocean’s brief production run, there were five recalls, although only three applied to both the 2023 and 2024 models. The most recent recall was for an issue that could lead to an unexpected reduction in regenerative braking when decelerating over bumps, the National Highway Traffic Safety Administration (NHTSA) said.

The automaker filed for Chapter 11 bankruptcy protection in June of this year amidst heavy losses and a struggling EV market. Fisker reported in a filing with the court that it had estimated liabilities of between $100 million and $500 million and more than 200 creditors. At the time, it listed assets with an estimated value between $500 million and $1 billion. The company will remain in Chapter 11 proceedings, the judge ruled.

Source: Fisker

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