Gov't Loan Recipient Fisker Auto Accelerates Toward Bankruptcy; Media Silent Thus Far

April 4th, 2013 4:25 PM

Update (April 5): Fisker has laid off three-quarters of its workforce at its headquaters in Anaheim, owes DOE approximately $193 million | With a substantial repayment of the $529 million loan guarantee it received almost four years ago -- courtesy of the U.S. taxpayer -- coming due at the end of the month, the electric car company Fisker is exploring the idea of filing for bankruptcy before then. Sources have confirmed that an influential law firm from Chicago has been hired to help with the proceedings.

The major networks have been reticent on the subject however, as if they have no intention of breaking the next Solyndra-like scandal.  It should be noted that no cars have been built since last July, and 200 of Fisker's American employees were recently furloughed.

The saga all began in 2009 when the Obama administration handed out $1 billion worth of loans to two electric car manufacturers, Fisker and Tesla. The latter appears to be on the verge of becoming profitable, but that assumes there's going to be a substantial number of people willing to pay near $1200 per month in leasing charges.

Fisker promised to do the majority of its auto assembly in Delaware, home of Vice President Joe Biden. Private investment partner Al Gore predicted that tens of thousands would be rolling off the the assembly lines there someday. But alas, two years later, it was revealed that production had shifted to Finland, where 500 workers had been hired to build the $100,000 cars called Karma.

Another report exposed that only 40 cars had been built at the time, and just two had been delivered. One of which was to actor and environmental activist Leonardo DiCaprio. Adding insult to injury, over 230 were recalled in late 2011 because of a fire hazard risk in the battery compartment. Luckily, very few were in the hands of consumers anyway.

Asked for comment back in October of 2011, founder and executive chairman Henrik Fisker was defiant. "We're not in the business of failing; we're in the business of winning," he said. "So we make the right decision for the business. That's why we went to Finland." Nearly a year and a half later, he would resign from the company that bears his namesake - citing 'differences with company management' in a March 2013 statement.

Now that the Kirkland & Ellis law firm is getting involved, to presume that a bankruptcy filing is coming isn't far-fetched. We'll keep our eyes open for the media's attention to this, but we're not holding our breath.