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Fisker faces imminent bankruptcy after failing to repay $3.5 million loan

The recent failure to make a large loan repayment further jeopardizes Fisker's survival in the EV market.

Fisker’s future looks increasingly uncertain following a recent 8-K filing that revealed the company failed to repay a nearly $3.5 million loan last month, bringing the electric vehicle (EV) automaker closer to potential bankruptcy. This setback casts a shadow over the second iteration of Fisker, particularly its Ocean SUV, which struggled despite initial promise.

The latest 8-K filing, submitted to the SEC on May 29, 2024, indicates that Fisker defaulted on a repayment due May 10, 2024. CVI Investments, Inc., the noteholder, has demanded immediate redemption of the outstanding 2024 Note, totaling $3,456,000, plus interest, late charges, and redemption premiums.

Fisker’s troubles are not new. Despite successfully launching its flagship Ocean EV, the company has faced significant challenges, including software issues and lower-than-expected sales. Throughout 2023, Fisker repeatedly lowered its production targets and introduced new strategies to maintain liquidity. However, these efforts have not been enough to stave off financial difficulties.

In March 2024, Fisker’s fiscal year 2023 report expressed “substantial doubt” about the company’s ability to continue operating. This led to discussions about securing financial backing from an OEM partner, but these talks have yet to yield results. Fisker’s stock plummeted after halting Ocean production at Magna-Steyr in Austria and significantly reducing the vehicle’s MSRP to liquidate existing inventory. However, the public’s reluctance to purchase from a company on the brink of bankruptcy led to mass cancellations of Ocean orders.

In early May, Fisker GmbH, the company’s Austrian subsidiary, filed for reorganization and court protection from creditors, akin to Chapter 11 bankruptcy in the U.S. This move left Magna with unmet production projections for the Ocean EV.

The recent failure to make a large loan repayment further jeopardizes Fisker’s survival in the EV market. With millions owed and the looming threat of additional fees and interest, Fisker may need to muster all remaining resources to meet its financial obligations, potentially leading to bankruptcy.

Fisker’s looming bankruptcy has been anticipated for some time, given its ongoing financial struggles. While it is always disheartening to witness the failure of EV startups, this latest development could be the final blow for Fisker redux, highlighting the harsh realities of the competitive EV industry.

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