An automobile manufacturer that had made waves with its promising electric sports car has declared Chapter 11 bankruptcy. The company had high hopes for its electric sports car, but the car failed all performance tests recently and has been a huge financial flop. The automobile company’s creditors include the U.S. Department of Energy, which stands to take a big loss if and when the company’s debts are discharged.
Attorney Streamlines Process
The auto company’s bankruptcy attorney has helped streamline the bankruptcy process, turning the Chapter 11 filing into an orderly repayment of those debts, which the company is able to repay. As part of the filing, the auto company will be selling nearly all of its assets to another hybrid technology firm, which plans to continue research and development of the electric sports car.
The U.S. Department of Energy stands to lose nearly $150 million as part of the Chapter 11 settlement. The DoE had issued almost $200 million in loans to the auto maker to help fund research and development of this promising electric automobile, but will get back less than $50 million of that.
The company’s electric sports car was a grand failure in its first incarnation on the market, failing to generate anything like the interest that was expected among automobile buyers. The company had been awarded a much bigger loan from the DoE, but their line of credit was frozen due to consistently missing their performance milestones along the way. The sale of the company to a hybrid technology firm means that the automobile may yet become a common sight on the roads.