Electric vehicle (EV) manufacturer Fisker Inc. is currently being investigated by the U.S. Securities and Exchange Commission (SEC) and is facing opposition from the U.S. Department of Justice (DOJ) regarding its Chapter 11 bankruptcy proceedings. Fisker filed for bankruptcy earlier this year after ceasing production in March.
Recent filings in the U.S. Bankruptcy Court for the District of Delaware suggest that these legal challenges could impact Fisker’s restructuring and liquidation plans.
The SEC has launched an investigation into Fisker’s activities leading up to its bankruptcy filing in June, focusing on potential violations of federal securities laws, as per court records.
In its filing, the SEC stated that Fisker’s bankruptcy plan must maintain the SEC’s ability to enforce regulations and hold the company accountable for any past wrongdoing.
The SEC has emphasized the importance of Fisker retaining all relevant documents and records post-bankruptcy to ensure compliance with ongoing investigations and any potential future actions.
According to the filings, the SEC has issued multiple subpoenas seeking information about Fisker’s operations before its financial collapse.
Simultaneously, the DOJ, representing the National Highway Traffic Safety Administration, has raised concerns regarding Fisker’s proposed financial provisions for vehicle recall expenses.
The DOJ argues that Fisker’s suggested $750,000 cap on recall expenses in its bankruptcy plan is inadequate to cover both parts and labor costs required for vehicle repairs.
Fisker has issued five separate recalls for its vehicles, addressing various issues from defective door handles to faulty electric water pumps, according to the filings.
The DOJ contends that Fisker’s current plan does not fulfill its legal obligations to consumers by restricting funds available for recalls and not fully covering the costs associated with necessary repairs.
The bankruptcy case involves Fisker’s assets and the establishment of a Liquidating Trust to distribute remaining assets to creditors.
Both the SEC and DOJ are advocating for modifications to ensure Fisker’s compliance with legal obligations related to its pre-bankruptcy activities and ongoing responsibilities.
The court is set to address these concerns during a hearing on Oct. 9. If the court supports the SEC and DOJ, Fisker may need to adjust its bankruptcy plan to meet regulatory requirements, including changes to its recall funding provisions and commitments to retain and provide relevant documents for the SEC’s investigation.
Fisker has not responded to requests for comments regarding the SEC and DOJ filings.
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