Assets of Fisker Automotive Inc., the bankrupt maker of hybrid cars, will be sold at auction after a judge limited the amount of debt that lender Hybrid Tech Holdings LLC can trade for the company.
Hybrid can put only $25 million of the $168.5 million it is owed by Fisker toward an acquisition bid, U.S. Bankruptcy Judge Kevin Gross found today at a hearing in Wilmington, Delaware. Fisker’s assets include a closed General Motors Co. factory in Wilmington.
“I’m not denying a right to credit bid,” Gross said. “I’m simply saying it should be capped at $25 million.”
The official committee of unsecured creditors on Dec. 30 proposed a sale process naming Wanxiang America Corp. as the “stalking-horse” bidder with a lead offer of $25.8 million, plus assumed liabilities. Wanxiang, a unit of China’s Wanxiang Group Co., on Jan. 8 increased its offer by $10 million.
The Wanxiang proposal required that the bankruptcy court limit Hybrid’s credit bid, or the amount it can offer to forgive on what it is owed, to $25 million, the price Hybrid paid to buy the loan from the government.
Henrik Fisker, who founded the automaker in 2007, told Congress in April that safety recalls, a bankrupt battery supplier and shipments lost to Hurricane Sandy hurt the company’s finances. Wanxiang last year bought most of the assets of the battery supplier, A123 Systems Inc.
Fisker, based in Anaheim, California, listed assets of as much as $500 million and debt of as much as $1 billion in its Chapter 11 petition filed Nov. 22. The company justified the fast pace of the case by claiming to have conducted an “extensive” marketing effort, along with federal officials, before filing bankruptcy, according to court papers.
Fisker missed its first payment on the low-interest U.S. loan on April 22. It had drawn about $192 million from an initial loan commitment of $529 million from a program intended to spur production of alternative-energy vehicles. Fisker was cut off from the remaining money in 2011 after missing production milestones for its Karma luxury model.
In December, Hybrid increased its offer by adding $1 million in cash, agreeing to share proceeds from the sale of the Delaware plant and agreeing to pay the site’s real estate taxes, according to court papers.
The bankruptcy case is In re Fisker Automotive Holdings Inc., 13-bk-13087, U.S. Bankruptcy Court, District of Delaware (Wilmington).