Fisker Files For Chapter 11 Bankruptcy
What do Justin Bieber, Ashton Kutcher and Al Gore all have in common? They may soon — baring a miracle — become the proud owners of the first orphan cars made in the 21st century for well-moneyed consumers by an automaker born in the 21st century, as Fisker Automotive has filed for Chapter 11 bankruptcy protection.
Unlike Chapter 7, where everything is liquidated and everyone is laid off forever ( an experience this writer has gone through herself with her last full-time employer), Chapter 11 will allow Fisker to attempt to get it together through reorganization with Richard Li of Hybrid Tech Holdings, LLC at the helm. Li purchased Fisker in a United States government auction last month for $25 million.
As for who this bankruptcy filing affects, look no further than your wallet: Fisker Automotive was one of a few automakers who took out a loan from the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing program. The total note was $529 million, though Fisker only took $192 million from the government while also taking $525 million from private investors. While the DOE recouped $28 million from the automaker’s first missed payment, the government (and thus, the taxpayer) lost $139 million on the investment.
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"As for who this bankruptcy filing affects, look no further than your wallet" At this point, the bankruptcy makes no difference at all to the taxpayer. The hit was already taken when the DOE loan was sold off at a discount.
Richard Li just threw away $25 million. "The Fisker Automotive technology and product development capability will remain a guiding force in the evolution of the automotive industry under Hybrid’s leadership." People with delusions of grandeur always think they're the missing link for a company's success. Furthermore, Fisker didn't even offer new technology; it's a gussied-up Volt.
We are looking at $2 - $4 trillion (factoring legacy costs) for the Bush/NeoCon invasion of Iraq. Which converted Iraq from an enemy of Iran to an ally of Iran (just to be clear, that is a bad thing for national security). And now we may lose up to 1/30,000th (the worse case scenario in bankruptcy court) of that amount backing loans for an automaker that made the best looking sedan on the market, and may be salvageable with restructuring. I don't like any waste, fraud and abuse, but this is a trivial drop in the bucket. The real waste, fraud and abuse is in national security. Because anytime someone's wasteful, corrupt spending is questioned they wrap themselves in the flag. These are just tiny examples: http://www.washingtonpost.com/politics/homeland-security-workers-routinely-boost-pay-with-unearned-overtime-report-says/2013/10/31/3d33f6e4-3fdf-11e3-9c8b-e8deeb3c755b_story.html "Take for instance the half-billion dollars [about three times the maximum amount of exposure the government has to Fisker] in Abrams tanks that Congress ordered up for the next two years, or the seven obsolete ships the Navy is being forced to keep. The Pentagon says it doesn’t want them, or need them. But taxpayers will keep paying the price." http://www.washingtontimes.com/news/2013/may/9/lawmakers-force-pentagon-to-buy-tanks-keep-ships-a/?page=all
Bieber, Kutcher, and Gore (sounds like a law firm) can always take their Fiskers to Maximum Bob Lutz's shop and convert to a conventional Corvette drive train. Or they could trade in the Karma for a finished $200k Destino.