Business
Judge approves Fisker bankruptcy plan favored by car owners
Fisker Inc. will wind down operations under a bankruptcy plan approved Friday that should allow car owners to drive their cars for years — while not paying anything to shareholders who were wiped out investing in the defunct Southern California electric-vehicle maker.
The plan approved by U.S. Bankruptcy Court Judge Thomas Horan in Delaware comes as Fisker is grappling with a Securities and Exchange Commission investigation into possible securities violations at the company before its June bankruptcy filing.
Fisker disclosed in August that it had been subpoenaed by the SEC, which recently confirmed that it was investigating the company and demanded that the bankruptcy plan preserve records.
“The SEC has been much more aggressive in pursuing its claims and remedies, even if the focus of its investigation has filed for bankruptcy,” said Jennifer Lee, a former assistant director at the SEC Division of Enforcement now in private practice.
The agency has declined to comment on its investigation.
Co-founders Henrik Fisker, the company’s chairman and chief executive, and his wife, Geeta Gupta-Fisker, the chief financial and operating officer, and other officials are facing multiple shareholder lawsuits.
Plaintiffs allege violations of fiduciary duties and securities laws, including media appearances by Henrik Fisker touting the company’s prospects even as its fortunes declined.
Horan issued his ruling after a flurry of filings, hearings and closed-door meetings this week as Fisker, its creditors and owners worked out an agreement.
Leadership of the Fisker Owners Assn. came out last week in favor of the proposed plan, stating the vehicle maker had made progress in addressing open recalls Fisker had issued for its Ocean SUV and had engaged in “constructive dialogue” over maintenance issues.
The approved plan also resolved concerns by the National Highway Transportation Safety Board over how to pay for the costs of recalls, including one for malfunctioning brakes and another for a defective water pump. Under the approved plan, Fisker’s estate will cover those costs.
Another issue that was resolved was access to Fisker’s cloud server for over-the-air software updates the Ocean must receive to operate. Access to those updates will be provided by American Lease, a Bronx, N.Y., business that leases Uber and Lyft cars. It bid $46.25 million for Fisker’s unsold inventory of more than 3,000 cars.
American Lease agreed late this week to pay $2.5 million for access to the cloud for five years and will share that access with Fisker’s more than 6,000 car owners for an undetermined price.
“We’re happy with the outcome today, and we’re optimistic about the future,” said Brandon Jones, president of owners association. “There’s still some discussion and negotiation needed, but we’ll have the services we need to maintain our cars.”
Founded in 2016, Fisker went public in 2020 via a 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.
Headquartered in Manhattan Beach, Fisker moved to La Palma in Orange County earlier this year.
Henrik Fisker, a noted automotive designer, envisioned the company’s debut model, the Ocean, as a competitor to Tesla’s Model Y, but the company had trouble making and delivering the high-tech SUV. The Ocean was plagued by software glitches, though its ride and build were praised.
Several thousand car owners were eligible to vote on the plan, because they had filed claims against Fisker making them unsecured creditors.
Evan Scott, 39, filed two claims, one for nearly $28,000 based on the loss of value of his Ocean after price cuts, and a second for $1,000 after his car was delivered with faulty tires that had to be replaced after four months. He said he voted for the plan but feels he was misled by the company after purchasing some $50,000 in stock, which is now worthless.
“Everything they said was a lie for the last six months, and they knew they were going to file for bankruptcy,” said the Portland, Ore., resident.
Fisker’s stock reached a high of $28.50 in March 2021 amid peak interest in electric vehicles and a stock bubble that was popped after a rise in interest rates the following year. By the time of Fisker’s bankruptcy, its shares were trading for a nickel.
The Ocean’s base model retailed for $38,999 with the highest trim version going for more than $60,000, until a series of sharp price cuts. American Lease purchased its fleet of Oceans for about $13,900 per vehicle.
Fisker filed for bankruptcy after it was unable to secure a strategic investment from an auto manufacturer that Reuters identified as Nissan. It also failed in efforts to sell the company to other buyers. It estimated liabilities of up to $500 million and assets at between $500 million and $1 billion at the time of the filing.
It is being liquidated under Chapter 11 of the bankruptcy code typically used by companies seeking to restructure and remain in business. The process, however, has allowed management to remain in control of day to day operations of the company as it works through recalls and other issues.
By the time the bankruptcy plan was approved there were more than 4,000 claims filed against Fisker, including two that totaled more than $1 billion — one for $694 million for debt held by U.S. Bank, and a second for $475 million by Magna International, which manufactured the Ocean for Fisker at an Austrian plant.
Fisker has yet to sell the assets it owns in Austria as well as its intellectual property, which includes the vehicles designs and software code — which theoretically could be purchased by another auto maker to produce the Ocean and other vehicles Fisker had planned. Proceeds from those sales will go into a trust, with the majority received by the company’s secured creditor.
That creditor is CVI Investments and its investment manager, Heights Capital Management Inc., affiliates of Susquehanna International Group, a large Pennsylvania trading firm founded by billionaire Jeff Yass. It has a secured claim of more than $180 million stemming from debt it is owed by Fisker.
A number of shareholders sent letters to the court asking for an SEC inquiry into Fisker’s dealings with the creditor, whose position as a secured lender had been opposed by unsecured creditors earlier in the bankruptcy process. Attorneys for CVI have not responded to requests for comment.
Car owners seeking compensation may have other avenues to recover funds from the loss of warranty protection, software and mechanical problems and other issues.
The law firm Hagens Berman is filing arbitration cases against J.P. Morgan Chase Bank, a leading Fisker auto loan maker. Partner Steve Berman said his firm is proceeding with some 1,300 individual arbitration demands. Chase declined to comment.
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.
The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.
The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.
The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.
It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.
However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.
Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.
Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.
“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.
In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”
The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.
“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.
Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.
Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.
Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.
The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.
But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.
Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.
A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.
“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .
Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.
Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.
Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.
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Politicians in Washington and the reporters who cover them have an often adversarial relationship.
But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.
Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.
While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.
“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.
It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”
Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.
“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.
The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.
Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.
Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”
Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.
Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.
“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”
For most of The Times’s reporters and editors, though, the evening will be experienced from home.
“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”
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