Fisker faces bankruptcy as workers file suit over layoffs
The Fisker Automotive board of directors was scheduled to meet this morning and among the topics of discussion would most certainly be the possible timing of Chapter 11 bankruptcy filings. Based on the results of today’s meeting, Fisker could enter bankruptcy proceedings within the week as the failing automaker works to protect what few resources that they have left.
Fisker is expected to make a $10 million dollar payment on their $200 million dollar Department of Energy loan and while the company allegedly has about $30 million in hand – the company realistically will not have the money to ever pay back that government loan. The company has built a car in ages and with a great many of the vehicles already built being destroyed earlier this year, Fisker has no way of generating the kind of revenue needed to pay back the DoE loan. With all of the interested suitors pulling their interest after company founder Henrik Fisker left last month, bankruptcy appears to be the only option left as the company enters its final days. Fisker has previously attempted to renegotiate the terms of the government loans but with the company in very bad shape, the feds aren’t too likely to allow for any reductions in payment or extensions unless Fisker finds a new owner or some serious investors very quickly. After raising over a billion dollars in private funding over the past few years, it would be a miracle to find anyone else willing to dump money into a failing company now without their leader so a last minute sale seems like the only possible salvation from bankruptcy.
In an effort to conserve cash, the company laid off about 75% of their staff on Friday but that has created a whole new problem for Fisker Automotive. It turns out that our government has a law called the US Worker Adjustment Retraining Notification Act (WARN) and this law states that a company has to give workers 60 days notice when they plan to conduct mass planned layoffs. Fisker didn’t give their workers 60 days or even 1 day as the management notified the workers last Friday morning that they would no longer have a job at the end of the day. Roughly 160 employees were laid off, keeping only those necessary employees who will either guide the Fisker Automotive brand to a new buyer – or into the grave. Unfortunately, Fisker may have violated federal law in doing so.