Fisker to Sell Assets in Bankruptcy at $139 Million Loss

Fisker Automotive Inc., whose $103,000 plug-in hybrid car was driven by celebrities including Justin Bieber, filed for bankruptcy with plans to be acquired by a group said to include Richard Li, son of Hong Kong’s richest man.

Hybrid Technology LLC, a newly formed group, paid $25 million to win a U.S. Energy Department auction to take over Fisker’s defaulted taxpayer loan. The group includes Li, according to two U.S. government officials who were briefed on the deal and asked not to be named because the terms are private.

U.S. taxpayers lost $139 million of the $192 million Fisker received.

“After having evaluated and pursued all other alternatives, 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 chief restructuring officer, said yesterday in a statement.

“The Fisker Automotive technology and product development capability will remain a guiding force in the evolution of the automotive industry under Hybrid’s leadership,” he said.

Shuttered Factory

The Anaheim, California-based company listed assets of as much as $500 million and debt of as much as $1 billion in a Chapter 11 petition filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. Fisker’s assets include a shuttered General Motors Co. (GM) factory in Wilmington that the company was supposed to reopen.

Anita-Marie Laurie, a spokeswoman for Fisker who works for Sitrick & Co. in Los Angeles, said she “can’t tell you anything beyond what the release says.”

Joseph Lo, who represents Richard Li at the Brunswick Group public-relations company, declined to comment.

The Energy Department decided to auction its interest in Fisker after the company defaulted on its loan without making a payment and attempts to find a buyer failed. The Fisker loan made President Barack Obama a target of Republican opponents, who accused him of “crony capitalism.”

Hybrid Technology is being represented in Washington by the Glover Park Group, a strategic communications firm, whose leadership includes Joe Lockhart, a White House spokesman during Bill Clinton’s presidency, and other top officials from that administration in which Al Gore served as vice president.

Gore was an initial customer of Fisker’s car, the Karma, and is a partner with Silicon Valley venture capital company Kleiner Perkins Caufield & Byers, which backed Fisker.

“We can’t comment beyond the press release at this time,” Caroline Langdale, a spokeswoman for Hybrid who works for Glover Park Group, said in a phone interview.

‘Fisker Legacy’

“HT is committed to building upon the Fisker legacy and presence in the United States as a foundation for the design and manufacture of advanced hybrid electric vehicles,” Langdale said in a statement distributed by the Energy Department. “We will work to realize the full potential these fantastic cars offer in helping to remake the auto industry for the 21st Century.”

Republican Representatives Fred Upton of Michigan and Tim Murphy of Pennsylvania said they were disappointed that the Energy Department sold the loan to a “foreign investor.”

“Fisker’s collapse closes yet another sad chapter in DOE’s troubled portfolio,” they said in a statement. “The jobs that were promised never materialized and, once again, taxpayers are on the hook for the administration’s reckless gamble.”

Holding Company

Hybrid Tech Holdings was formed Oct. 29 in Delaware by an incorporation agency in Wilmington, according to the state’s Division of Corporations. No reports were on file for the company, and there’s no information on its officers.

The company was incorporated after the Energy Department announced the auction Sept. 17 in a blog post. It accepted initial bids until Oct. 7 and held the auction Oct. 11, according to a posting on a government sales website.

Fisker, based in Anaheim, California, received $192 million from an initial loan commitment of $529 million from a program intended to spur production of alternative-energy vehicles. It was cut off from the remaining money in 2011 after missing production milestones for the Karma.

The Energy Department yesterday defended the loan, saying taxpayers only lost about a quarter of the initial loan amount.

‘Some Risk’

“Recognizing that these investments would include some risk, Congress established a loan loss reserve for the program, and the Energy Department built in strong safeguards to protect the taxpayer if companies could not meet their obligations,” Bill Gibbons, an agency spokesman, said in an e-mail.

“Because of these actions, along with the sale” to Hybrid Tech, Gibbons said, “the Energy Department has protected nearly three-quarters of our original commitment to Fisker Automotive.”

The company was co-founded by and named after former Aston-Martin designer Henrik Fisker, and backed by $1.2 billion in venture-capital investments. It stopped making cars last year after a Karma quit running during a Consumer Reports road test and failures in batteries supplied by A123 Systems Inc. led to a U.S. recall and A123’s bankruptcy.

Most of Fisker’s remaining vehicles were destroyed by flooding during 2012’s Hurricane Sandy after the company ceased production, and its insurance company refused to pay for the damages. Henrik Fisker quit after about 75 percent of the company’s employees were fired.

Design Commitment

When it resorted to auctioning off the loan balance, the Energy Department said it would require bidders to commit to doing design and engineering work in the U.S., building on the program’s intention to create or retain jobs in the country.

The department recouped about $28 million from Fisker’s accounts after the first payment was missed. Fisker faces millions of dollars in court judgments over unpaid bills, and would have had more restructuring options absent the government’s financial interest.

The vehicle-lending program still has 60 percent of its $25 billion in available money and hasn’t awarded a loan since 2011. The department recently said it would begin taking applications again, though legislation has been introduced in the U.S. Senate to stop that from happening.

Fisker, which produced the Karma in Finland, planned to use most of its $529 million loan commitment to develop a second model at the former GM plant in Delaware. It was never produced.

Largest Loan

Fisker’s loan was the largest approved for three startup automakers granted loans. The Energy Department earlier auctioned the balance of Vehicle Production Group LLC’s $50 million loan after the closely held wheelchair-van maker failed without making a payment.

Tesla Motors Inc. (TSLA) repaid its $465 million loan in full in May, nine years early. Ford Motor Co. and Nissan Motor Co. are making regular payments on their loans.

BMW Group, with a claim of $74 million, is listed as the largest creditor in Fisker’s bankruptcy filing without collateral backing its claim.

The case is In re Fisker Automotive Inc., 13-13086, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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