EV Maker Nikola Files for Chapter 11 PRESPRESSCY Protection

Nikola Corp, the Electricity Industry Company, has submitted bankruptcy, Chapter 11, on Wednesday, after the company failed to overcome market challenges and macroeconomics.

“Like other companies in the electric car industry, we have faced many factors in the market in the market and the macroeconomic economy that affected our ability to work,” Steve Jersaki, CEO, said in a statement.

Jersky said that the company has taken “many measures” to raise capital, reduce obligations, clean its public budget and maintain cash to maintain operations in recent months, but it was not enough to overcome the “important challenges” that the company was facing. He said that the application for bankruptcy was “the best possible path forward” for the company and stakeholders.

The former executive officials in the cars have happened to pay the electric car “very early and very fast.”

As of Wednesday, Nicolas owns about $ 47 million in cash to keep things run while trying to sell and reorganize assets. The company also seeks to obtain the court’s approval to sell its assets quickly to ensure that it has enough money to cover the costs during the bankruptcy process.

The smooth sailing of the company, which was announced in 2020, was not in a short time, a strategic partnership with General Motors, as Detroit Motor Company received a share of $ 2 billion in Nicolas.

The founder, Tiffur Milton, who resigned in 2020, was sentenced to four years in prison in 2023 for engaging in securities and wire fraud regarding a plan to defraud investors and mislead them about developing products and technology in Nicolas, according to public prosecutors.

In 2023, the company summoned hundreds of its large trucks and stopped sales of others after it discovered that the cooling liquid leakage was found inside one battery package to be the potential cause of truck fire at the company’s headquarters in Phoenix in June of that year.

EV makers for bankruptcy after cash bleeding

In addition to poor demand and operational challenges, the company has witnessed a quick rotation within the C-SUITE. Three of the different executives took over within two years. Jersaki took command in August 2023, but even under his leadership, the company’s capital decreased quickly.

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“We are studying every opportunity to improve money,” Jersky said in the company’s profit call in the third quarter in October. It was estimated that the company has enough money only to finance the expected operating costs and meet its obligations during the first fiscal quarter in 2025.

Its shares have decreased more than 70 % so far.

A heavy truck for batteries at Nikola Tre in Nikola Corp.-VECO SPA, joint electric truck station in Olm, Germany, on Wednesday, September 15, 2021. (Andreas Gebelt / Bloomberg via Getty Images / Getty Images)

“The electric vehicle industry continued to struggle amid the increase in competition, operational challenges and high costs, which leads to most of the EV manufacturers that turn into chapter 11 to look to the sale of assets, or even liquidation, rather than reorganizing business,” Sarah, “said Foss, President Debtwire Legal Law, Fox Business.

Foss said Nicolas is following a similar way to bankruptcy, such as the start of the Fisker, who used his bankruptcy in June 2024 to sell its assets, and Lordstown Motor, who sold most of its assets to the company’s former CEO, and Proterra, which sold its business lines in bankruptcy in August 2023.