US-based electric truck maker Nikola and some of its subsidiaries have filed for Chapter 11 bankruptcy in the US. The company has also filed a motion seeking authorisation to pursue an auction and sale process of the company's assets.
The company has multiple customary motions to ensure its limited operations continue during the sale process. The company is also aiming to continue operating some non-dealer service and support operations till March 2025 for its trucks that are currently in use. After March, Nikola said it will need partners to support such activities and look after its existing customers.
Nikola currently holds about $47 million in cash to fund foregoing activities, implement post-petition sale process and exit Chapter 11 through a planned process.
"With the dedication of our employees and support from our partners, Nikola has taken significant steps to move zero-emissions transportation forward, including bringing the first commercially available Class 8 hydrogen fuel cell electric trucks to market in North America and developing the HYLA hydrogen refueling highway, connecting Northern California to Southern California," said Steve Girsky, President and CEO of Nikola.
Why did Nikola enter Chapter 11?
Girsky said the company faced “various market and macroeconomic factors”, which affected its ability to operate. He went on to state that in the recent months, the company has taken numerous actions to raise capital, reduce liabilities, clean up its balance sheet and save cash to sustain operations.
{{/usCountry}}Girsky said the company faced “various market and macroeconomic factors”, which affected its ability to operate. He went on to state that in the recent months, the company has taken numerous actions to raise capital, reduce liabilities, clean up its balance sheet and save cash to sustain operations.
{{/usCountry}}“Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders,” Girsky added.
What will happen to Nikola now?
The company assets will now be auctioned to the highest bidder, if approved by the court. The bidders will be able to purchase the assets “free and clear of Nikola's indebtness and certain liabilities", Nikola said. It added, “Interested parties could include both strategic and financial buyers, for whom substantial due diligence materials are available.”