1 of 2 | On Monday, the Phoenix-based global producer of zero-emission EV’s revealed that the company and certain subsidiaries filed voluntary petitions under chapter 11 of the U.S. bankruptcy code in a federal court in Delaware. Photo Courtesy of Nikola Corp/UPI
Feb. 19 (UPI) — The electric vehicle startup Nikola annouced Wednesday it has filed for bankruptcy protection after it failed to secure new money or locate a buyer to keep operating.
On Monday, the Phoenix-based global producer of zero-emission EVs revealed that the company and certain subsidiaries filed voluntary petitions under chapter 11 of the U.S. bankruptcy code in a federal court in Delaware.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” Nikola CEO Steve Girsky said.
The company also filed a motion to seek authorization in order to pursue an auction and sale of its assets under section 363 of the code.
The proposed bidding, if approved by a court, would allow interested parties to submit a binding offer to acquire Nikola’s assets free and clear of Nikola’s indebtedness and certain liabilities.
“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,” added Girsky.
In 2018, Nikola sued electric automaker Tesla for $2 billion for patent infringement.
It reported $198 million in cash at the end the third quarter last year. Nikola officials now say the company has approximately $47 million in cash on hand to fund the chapter 11 proceedings.
Girsky, then board chairman, replaced then-CEO Michael Lohscheller in 2023. In October, he said the company was “actively talking to lots of potential different partners who value what we do and value what we’ve built.”
Nikola, once seen as a rival to Tesla, agreed in December 2021 to pay $125 million to settle federal charges that it defrauded investors after federal prosecutors charged Nikola’s founder and former CEO Trevor Milton with securities, wire fraud and for lying about “nearly all aspects of the business” to increase sales.
Meanwhile, its stock value has traded since early December under $2 a share.
At its peak in 2020, Nikola had once been valued at $30 billion, greater than the value of Ford Motor Company.
Nikola began producing vehicle in 2022. As of the last year’s third quarter of last year, Nikola had produced only 600 vehicles by that point.