After a relatively short legal snafu, Fisker (OTCMKTS:FSRNQ) will be allowed to essentially liquidate its remaining inventory of electric vehicles (EVs) as a means of paying its creditors and bankruptcy costs. Indeed, on Tuesday, a Delaware bankruptcy court judge ruled in favor of the sale after the company faced an objection by the U.S. Trustee. What does this mean for Fisker stock?
Well, judging by its plummeting stock price today, nothing particularly good. Fisker stock is down a staggering 70% today, leaving the stock’s value at less than 1 cent per share.
Yesterday’s legal ruling comes after Fisker attempted to sell its remaining inventory of Fisker Ocean SUVs to American Lease, a New York-based auto rental company.
The U.S. Trustee, a branch of the Department of Justice tasked with overseeing federal bankruptcy cases, stepped in just days ago to intervene in the sale. According to the U.S. Trustee, the sale should be cancelled because 1) Fisker failed to notify the Trustee in a timely manner, 2) the sale lacks a valid business justification and 3) the sale grossly undervalues the company’s vehicles.
Fortunately, Fisker’s lawyer explained the nature of the deal in court on Tuesday, leading to the judge ruling in favor of the EV firm. Reasonably so, American Lease was essentially the only company willing to make a bid on the cars — and even agreed to wait until the four pending recalls are cleared before operating them.
Fisker Stock Continues to Dwindle as Sun Sets on EV Maker
With the approval of the sale, Fisker will begin delivering its Ocean EVs to American Lease over the next few days. The deal is for a maximum of $46.25 million.
This money will be used to pay its remaining employees, who are currently working on the active recalls on the Ocean model. The rest of the money will likely be distributed to Fisker’s creditors, although it’s unclear exactly what order the recompense will take, given the number of lenders from which Fisker has accepted money.
Regardless, this likely marks the beginning of the end for Fisker stock. Currently the company is only traded over-the-counter. Given its shrinking stock price, FSRNQ may only have limited time left even on the pink sheets.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
