Hydrogen electrical trucking startup Nikola Corp. filed for Chapter 11 bankruptcy protection Wednesday after it did not discover a purchaser or safe further funds to keep up operations.
Nikola was as soon as a Silicon Valley darling, valued at $30 billion in June 2020 after it went public by means of a particular objective acquisition merger. However a sequence of scandals surrounding its founder and former CEO Trevor Milton put the corporate into free fall.
Now, Nikola plans to go to public sale with its property, pending court docket approval, in keeping with a regulatory submitting.
“Like different corporations within the electrical car business, we now have confronted varied market and macroeconomic elements which have impacted our means to function,” Steve Girsky, president and CEO of Nikola, stated in a press release.
“In current months, we now have taken quite a few actions to boost capital, scale back our liabilities, clear up our steadiness sheet and protect money to maintain our operations. Sadly, our best possible efforts haven’t been sufficient to beat these vital challenges, and the Board has decided that Chapter 11 represents the very best path ahead underneath the circumstances for the Firm and its stakeholders.”
The corporate has about $47 million in money readily available to fund its chapter course of. Nikola’s proposed bidding course of would permit events to submit binding presents to accumulate Nikola’s property, impartial of the corporate’s debt or liabilities.
A few of these property would come with Nikola’s Class 8 hydrogen gas cell electrical vans and battery electrical truck platforms. Nikola had additionally been within the strategy of creating a HYLA hydrogen refueling freeway in California.
The chapter submitting caps a yearslong unraveling. Nikola had been thought-about a golden instance of a SPAC gone proper, and had even closed a multi-billion greenback cope with Common Motors. Till Milton was accused of fraud for making exaggerated claims concerning the firm’s electrical truck know-how.
Prosecutors within the case in opposition to Milton claimed that he had deceived traders since 2019 by mendacity about Nikola having constructed a truck from the “floor up” and creating batteries that had been really purchased elsewhere.
Then there was the notorious Nikola advertising video that exhibits a truck showing to drive by itself energy. In actuality, it was rolling down a hill.
Following that video, a report from short-seller Hindenburg Analysis referred to as the corporate a fraud, and Milton stepped down in September 2020. He was convicted of wire and securities fraud in 2022. He’s at the moment out on bail whereas he appeals his four-year jail sentence.
Nikola finally paid a $125 million penalty in a settlement with the U.S. Securities and Trade Fee. The corporate’s inventory collapsed, leading to critical losses for traders, in addition to the corporate.
Nikola had been attempting to boost sufficient capital to proceed operations ever since. Most just lately, in December 2024, Nikola tried to boost $100 million in a standard inventory sale to repay its money owed and lift fairness, after warning traders the month earlier than throughout its third-quarter earnings name that the corporate solely had sufficient money to assist its enterprise into Q1 2025.
Nikola reported $198 million in money on the finish of the third quarter.