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Fisker seeks rejection of Chinese suitor it blames for its bankruptcy

Source: Reuters - Thu, 2 Jan 2014 08:53 PM
Author: Reuters
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* Unsolicited suitor Wanxiang allegedly contributed to bankruptcy

* Fisker urges court to approve sale to Hong Kong's Richard Li entity

* Judge to consider Li, Wanxiang plans Jan. 10

By Tom Hals

Jan 2 (Reuters) - Fisker Automotive, the bankrupt maker of a plug-in hybrid sports car, asked a federal judge to approve its proposed sale to a Hong Kong tycoon rather than a Chinese suitor that Fisker alleged was to blame for its failure.

A courtroom showdown is set for Jan. 10 that will determine the future of the defunct car maker, which was launched with a controversial U.S. government loan. U.S. Bankruptcy Court Judge Kevin Gross must decide if Fisker's business will be put to open auction or sold to an affiliate of Richard Li as the company has proposed.

The hearing was originally scheduled for Friday, but was postponed one week as a major snowstorm threatened to disrupt travel throughout the eastern United States.

The company's plans were thrown into doubt on Monday, when the official creditors' committee proposed auctioning the business and presented an initial $24.725 million bid from the U.S. unit of Wanxiang Group, China's top auto parts company.

Fisker attacked the creditors' proposal in a series of court filings on Wednesday with the bankruptcy court in Wilmington, Delaware, noting that after Wanxiang bought A123 Systems Inc, a battery maker, it cut supplies to Fisker.

"Wanxiang now seeks to profit from a bankruptcy that it helped cause," Fisker said in a filing.

An attorney for the creditors' committee disputed that, noting that Wanxiang acquired A123 months after Fisker idled its production to save cash. "Fisker was no longer producing cars at that time," said Sunni Beville, of law firm Brown Rudnick.

The creditors' committee has called the Wanxiang bid proposal the best option. It also asked the bankruptcy court to allow it to sue to former Fisker director David Manion and others for improperly pushing the sale to Li.

Hanging in the balance are the assets of a company once touted as America's "green" rival to prestigious brands such as Maserati, but that has not made its signature Karma vehicle in more than a year.

The company obtained a $529 million loan from the Department of Energy that was meant to promote fuel-efficient cars, which in turn helped to lure private backing.

Fisker raised more than $1.4 billion in public and private funds after its founding in 2007. But lavish spending, quality and engineering blunders and other mistakes drained the company's coffers and delayed the launch of the Karma, several people close to the company told Reuters earlier this year.

An entity affiliated with Li planned to buy Fisker after he paid $25 million for Fisker's government loan, outbidding Wanxiang. Instead of using cash, the Li affiliate planned to buy Fisker's assets using a "credit bid" of a portion of what Fisker owed on that loan, leaving other creditors with next to nothing.

Court records show that a majority of unsecured creditors such as design consultants and suppliers voted to reject the plan to sell Fisker to Li.

The case is In re Fisker Automotive Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 13-13087.

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