Fisker furloughs U.S. workforce for a week
Company has retained law firm to advise on possible bankruptcy filing, report says
Fisker Automotive, the struggling maker of $100,000 plug-in hybrids whose namesake founder abruptly resigned earlier this month, has furloughed its entire U.S. workforce this week to preserve cash as it seeks a financial lifeline.
Fisker spokesman Roger Ormisher confirmed the furloughs, which involve just over 200 employees. Fisker workers began their furloughs on Friday, March 22, and are scheduled to return to work on Monday, April 1. Good Friday is a paid day off for employees.
Separately, Fisker has hired law firm Kirkland & Ellis to advise it on a possible bankruptcy filing, a person close to the matter told Reuters today.
Kirkland's Anup Sathy, a bankruptcy lawyer who handled the Chapter 11 filings of General Growth Properties and Innkeepers USA Trust, is advising the U.S. automaker, the source said, declining to be named because the matter is not public.
Neither Kirkland & Ellis nor Sathy were immediately available to comment. The Wall Street Journal reported the hiring of Kirkland & Ellis, earlier today.
On Wednesday, Ormisher told Automotive News that "to his knowledge" Fisker had not retained bankruptcy counsel.
The automaker, which has not produced a vehicle since last summer, has spent months seeking a partner to help shore up its finances and help it build it second plug-in hybrid, called the Atlantic.
Fisker's efforts to find a strategic partner have stalled in recent weeks. Fisker had held talks with two Chinese automakers, Zhejiang Geely Holding Group, the owner of Sweden's Volvo, and Dongfeng Motor Group Co. Ormisher said the company is continuing to discuss deals with "a couple of potential partners."
A company statement called the furloughs "a common practice, particularly in the automotive industry, to manage costs and operations based on current activity levels and commercial requirements and is not expected to materially impair Fisker's operations or the scope or timing of Fisker's future business plans."
The furloughs come two weeks after Henrik Fisker, the former BMW designer who founded Fisker Automotive in 2007, resigned from the company, citing "several major disagreements" with company management about Fisker's business strategy.
Meanwhile, the cash-strapped company, which launched the Karma plug-in hybrid in late 2011, faces a loan payment to the U.S. Department of Energy in about a month.
Ormisher declined to reveal the amount of the loan payment due in late April. The DOE could not be immediately reached for comment.
Since its founding, the company has drummed up about $1.2 billion in private financing. In 2009, Fisker also won a $529 million federal loan as part of an Obama administration program to spur advanced vehicle development.
But Fisker's delay in bringing the Karma to market prompted the DOE to freeze the loan, which Fisker planned to use to finance the Atlantic. The resulting cash crunch was exacerbated by the bankruptcy of its chief battery supplier, A123 Systems, now owned by Wanxiang Group, China's largest auto parts maker.
The business acquired by Wanxiang will continue to be known as A123 while other assets of the company that were not acquired will remain in bankruptcy court under the name B456 Systems Inc., A123 said in a statement on its Web site.
Fisker's obligations to the U.S. government as part of its federal loan presented a roadblock in its discussions with Geely, people familiar with the matter have said.
Ryan Beene, Reuters and Bloomberg contributed to this report.
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