Fisker Automotive has filed for Chapter 11 bankruptcy protection, a move that's appeared all but inevitable since its Karma electric sports car failed both in tests and on the market. The filing comes alongside Fisker's decision to sell nearly all of its assets to Hybrid Technology, an investor group that Reuters reports will have the automaker restore production of the Karma and begin development of new vehicles. The Karma has reportedly been out of production for around 18 months now, following its flop at launch: only 2,000 cars were shipped, one caught fire, and another broke down in myriad ways during a Consumer Reports road test.
The Department of Energy will lose $139 million on the deal
Fisker's sale is major loss for the Department of Energy, which had issued the automaker $192 million in loans to but will only receive $25 million back from Hybrid, reports Reuters. In all, the DOE will only recoup around $53 million of its investment. Fisker had actually won a far larger loan of $529 million, but its credit line was frozen in 2011 after missing performance milestones.
In April, Fisker fired three-quarters of its workforce to conserve cash while looking for a buyer and trying to avoid a bankruptcy filing. "We believe the sale to Hybrid and the related Chapter 11 process is the best alternative for maximizing Fisker Automotive's value for the benefit of all stakeholders," Marc Beilinson, Fisker Automotive's chief restructuring officer, said in a statement yesterday. Beilinson says Fisker plans to "remain a guiding force" in the auto industry, though there's no timeline yet on when its research and production will get back on track.