DETROIT: Fisker Automotive, the struggling government-backed hybrid sports car maker, on Friday terminated most of its rank-and-file employees in what sources said was a last-ditch effort to conserve cash and stave off a potential bankruptcy filing.
Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has "at least" $30 million in cash on hand, according to a source familiar with the company's finances.
About 160 workers were fired at a Friday morning meeting at Fisker's Anaheim, California, headquarters, according to a source who attended the meeting.
They were told that the company could not afford to give them severance payments. Fisker confirmed in a statement that it let go about 75 percent of its workforce but did not specify the number of workers affected. It called the move "a necessary strategic step in our efforts to maximize the value of Fisker's core assets."
"Unfortunately we have reached a point where a significant reduction in our workforce has become necessary," Fisker said, adding that it was still searching for a strategic partner. The mass termination triggered a lawsuit seeking class-action status from angry former employees.
A lawyer for the fired employees said he expects the company to file for bankruptcy "sooner rather than later."
A Fisker representative could not immediately answer questions on the company's financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring.
The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker's cash crunch.
In late March, Fisker put its entire U.S. workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing.
Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company's assets, according to the source who attended Friday's meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the U.S. Department of Energy.
CHALLENGES
Friday's class action is one of several challenges Fisker has faced over the past month. In March, company founder Henrik Fisker abruptly resigned, citing "several major disagreements" with top management.
The lawsuit accuses the automaker of violating the Worker Adjustment and Retraining Notification or WARN Act, which requires 60 days' notice for mass layoffs. The lawsuit seeks 60 days' worth of unpaid wages and other benefits, as well as interest.
Jack Raisner, an attorney for the plaintiffs, told Reuters that the termination is a "harbinger" of likely bankruptcy.
Raisner, who represented employees of Solyndra, the government-backed solar panel maker that terminated its employees shortly before filing for bankruptcy in 2011, said Fisker's current situation is similar to Solyndra's final days.
"It feels like almost deja vu," he said. The Energy Department's loan program has been under scrutiny ever since Solyndra's bankruptcy.
Since then, other U.S.-backed companies have gone bankrupt, notably Fisker's battery supplier formerly known as A123 Systems and now called B456 Systems Inc.
APRIL 22 PAYMENT LOOMS
Fisker, which was founded in 2007, hopes to renegotiate a DOE loan payment due on April 22, which the source familiar with Fisker's finances said was around $10 million.
indiatimes.com
Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has "at least" $30 million in cash on hand, according to a source familiar with the company's finances.
About 160 workers were fired at a Friday morning meeting at Fisker's Anaheim, California, headquarters, according to a source who attended the meeting.
They were told that the company could not afford to give them severance payments. Fisker confirmed in a statement that it let go about 75 percent of its workforce but did not specify the number of workers affected. It called the move "a necessary strategic step in our efforts to maximize the value of Fisker's core assets."
"Unfortunately we have reached a point where a significant reduction in our workforce has become necessary," Fisker said, adding that it was still searching for a strategic partner. The mass termination triggered a lawsuit seeking class-action status from angry former employees.
A lawyer for the fired employees said he expects the company to file for bankruptcy "sooner rather than later."
A Fisker representative could not immediately answer questions on the company's financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring.
The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker's cash crunch.
In late March, Fisker put its entire U.S. workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing.
Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company's assets, according to the source who attended Friday's meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the U.S. Department of Energy.
CHALLENGES
Friday's class action is one of several challenges Fisker has faced over the past month. In March, company founder Henrik Fisker abruptly resigned, citing "several major disagreements" with top management.
The lawsuit accuses the automaker of violating the Worker Adjustment and Retraining Notification or WARN Act, which requires 60 days' notice for mass layoffs. The lawsuit seeks 60 days' worth of unpaid wages and other benefits, as well as interest.
Jack Raisner, an attorney for the plaintiffs, told Reuters that the termination is a "harbinger" of likely bankruptcy.
Raisner, who represented employees of Solyndra, the government-backed solar panel maker that terminated its employees shortly before filing for bankruptcy in 2011, said Fisker's current situation is similar to Solyndra's final days.
"It feels like almost deja vu," he said. The Energy Department's loan program has been under scrutiny ever since Solyndra's bankruptcy.
Since then, other U.S.-backed companies have gone bankrupt, notably Fisker's battery supplier formerly known as A123 Systems and now called B456 Systems Inc.
APRIL 22 PAYMENT LOOMS
Fisker, which was founded in 2007, hopes to renegotiate a DOE loan payment due on April 22, which the source familiar with Fisker's finances said was around $10 million.
indiatimes.com
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