Electric vehicle manufacturer Nikola Corporation has filed for Chapter 11 bankruptcy protection, writes Peter Brown, as it now looks to pursue an auction and sale of its assets.
The Chapter 11 of the United States Bankruptcy Code allows a restructure under the bankruptcy laws of the United States, often this means the debtor remains in control of its business operations as a debtor in possession and is subject to the oversight and jurisdiction of the court.
It leads to one of three outcomes for the debtor; reorganisation, bankruptcy or dismissal.
Based in Arizona, Nikola Corporation had already said it was struggling to secure a buyer or gain extra capital.
The business was once valued at $30 billion and had a multibillion-dollar deal with General Motors, however fraud allegations against its founder Trevor Milton in 2020 marked a downturn.
In 2022, he was found guilty of securities and wire fraud, resulting in a four-year prison sentence and $1million fine.
The General Motors deal collapsed as did Nikola’s stock price.
To date it has manufactured 600 vehicles since 2022.
Nikola Corporation began life as Nikola Motor Company and presented its first ‘concept vehicle’ in 2016, a natural gas fuelled turbine electric tractor unit.
The company went public in 2020, and in 2022 it said it would delivery upwards of 300 battery electric tractor units, called Nikola Tre.
In 2019, the company unveiled a Nikola Tre electric truck concept (a rebadged version of the Iveco S-Way) that would also be aimed at the European market.
However, the Securities and Exchange Commission and the Department of Justice launched investigations into securities fraud allegations, which ended Trevor Milton’s time with the company and began Nikola’s downfall.
