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EV maker Fisker to be liquidated under plan that will keep owners on the road

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EV maker Fisker to be liquidated under plan that will keep owners on the road

Troubled electric vehicle maker Fisker Inc. has reached a settlement with creditors that will allow it to liquidate its assets while working with owners to keep their pricey SUVs on the road.

The company filed for Chapter 11 bankruptcy protection in June after failing to reach a strategic agreement with another automaker that could provide it with more capital and domestic manufacturing capacity.

The global agreement reached Friday in U.S. Bankruptcy Court in Delaware allows Fisker management to remain in charge for some time as the operation winds down.

That was important to Fisker, the National Highway Traffic Safety Administration and car owners, who filed objections to converting the bankruptcy to Chapter 7, noting the startup’s only vehicle — a premium SUV called the Ocean — has several open recalls for faulty door handles, loss of power and other problems.

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“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 Assn. “We can be sure that employees and the advisors who are helping the company do this remain on board.”

The liquidation plan, which details how proceeds from asset sales will be distributed among various creditors, is subject to a vote by all unsecured creditors.

The plan also calls for the owners association to have a voice in the sale of Fisker’s intellectual property, which includes the designs and computer code that were necessary to build and operate the vehicles. The owners need long-term access to Fisker’s “cloud software,” which is crucial for sending over-the-air updates to the vehicle software that controls the Ocean.

Other issues, including access to parts and long-term service, are still being negotiated outside the bankruptcy process, Shamah said.

However, with secured and unsecured claims against the company likely to top $1 billion, shareholders who invested in Fisker are unlikely to get their money back.

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“It’s a virtual certainty that there will be no money for equity. There’s no way you’re going to have enough to pay claims in full in this liquidation,” said David Golubchik, a veteran bankruptcy attorney at Levene, Neale, Bender, Yoo & Golubchik in Los Angeles.

Founded in 2016 by auto designer Henrik Fisker, the company went public in 2020 via a SPAC, or special purpose acquisition company, backed by private equity firm Apollo Global Management. The company raised $1 billion in equity capital and borrowed even more, but ran out of money and only sold about 7,000 of its vehicles.

The Ocean was envisioned as a competitor to Tesla’s Model Y, but Fisker had trouble making and delivering the snazzy SUV through a direct sales model borrowed from Tesla. The SUV also was plagued by software glitches, though its ride and build were praised.

Fisker made more than 11,000 Oceans before it stopped production, according to a court filing. The bankruptcy court already has approved the sale of the company’s remaining inventory of 3,321 Oceans, which were acquired for $46.25 million by American Lease, a Bronx, N.Y., business that leases Uber and Lyft cars.

Fisker, which was based in Manhattan Beach before shutting down its headquarters and moving to Orange County, has few other hard assets.

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Henrik Fisker, the chairman and chief executive, built the company to be asset light, with vehicles assembled at an Austrian factory owned by a subsidiary of Magna International, a Canadian manufacturer of automobile components.

Fisker’s most valuable asset might be its intellectual property, but it’s unclear what bids it may attract.

The settlement came after discussions among Fisker and its secured and unsecured creditors following a dispute over whether to convert the case to a Chapter 7 liquidation run by a trustee.

The conversion was sought by the company’s largest secured creditor: CVI Investments and its investment manager, Heights Capital Management Inc., both affiliates of Susquehanna International Group, a large Pennsylvania trading firm founded by billionaire Jeff Yass.

CVI argued the administrative costs of operating under Chapter 11 were draining and that were was little likelihood the company would remain in business.

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However, its status as a legitimate secured creditor was questioned by the Committee of Unsecured Creditors, including U.S. Bank, which has filed a $681-million claim related to Fisker notes it holds.

Last year, Fisker sold convertible notes to CVI, receiving gross proceeds of $450 million, according to a court filing by the unsecured creditors. Fisker filed its third-quarter earnings report late, technically defaulting on the notes and converting them into secured debt.

The committee alleged that CVI profited an estimated $57 million from the sales of its converted shares, diluting the stock and driving its price under 10 cents a share this year.

Shareholders have called for the Securities and Exchange Commission to look into CVI’s and Height’s roles in the bankruptcy, including potential short selling that may have driven Fisker’s shares to pennies. Attorneys for CVI and Heights did not return messages seeking comment.

Fisker has received a subpoena from the SEC, The Times reported last week. It is unclear what information the agency is seeking.

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The company is facing multiple shareholder lawsuits that focus on Fisker’s late third-quarter filing and the role it played in the collapse of the stock price. In 2021, the company’s market cap approached $8 billion before shares traded at pennies prior to the bankruptcy filing.

The lawsuits included allegations that Fisker, his wife Geeta Gupta-Fisker (the company’s co-founder, chief financial officer and chief operating officer) violated their fiduciary duties and securities laws. The company declined to comment.

Fisker’s stake in the company is now virtually worthless, but he sold about $20 million worth of shares in 2021 well before the stock declined. Fisker and his wife also received bonuses in December of a little more than $1 million each, which were disclosed last week in a bankruptcy court filing by Fisker. The company declined to comment on the reason for the bonuses.

Evan Scott, 39, who owns a Fisker Ocean and figures he lost about $50,000 on the company’s stock, said he was shocked to learn about the bonuses.

“As a shareholder and a car owner who had supported Henrik and his wife, I am seeing red,” Scott said. “They knew the company was in dire straits. They were just expediting bankruptcy by doing that.”

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U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders

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U.S. Space Force awards .6 billion in contracts to South Bay satellite builders

The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.

The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.

Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.

The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.

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The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.

Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.

“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.

The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.

Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.

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Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.

Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.

Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”

The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.

Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.

None of the 42 locations where the product was sold were in California.

Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.

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“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”

The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.

The company recalled the following types of salad dressing:

  • Creamy Poblano Avocado Ranch Dressing and Dip
  • Ventura Caesar Dressing
  • Pepper Mill Regal Caesar Dressing
  • Pepper Mill Creamy Caesar Dressing
  • Caesar Dressing served at Costco Service Deli
  • Caesar Dressing served at Costco Food Court
  • Hidden Valley, Buttermilk Ranch
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They graduated from Stanford. Due to AI, they can’t find a job

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They graduated from Stanford. Due to AI, they can’t find a job

A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.

The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.

When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.

Top tech companies just don’t need as many fresh graduates.

“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”

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While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.

Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.

“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”

The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.

Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.

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“The industry for programmers is getting very oversaturated,” Akgul said.

The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.

Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.

It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.

In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.

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Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.

Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.

A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.

“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”

To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.

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Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.

Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.

Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.

As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.

“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”

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After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.

Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.

“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”

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