Energy Department expects Fisker to default, pulls funds from reserve account

Brittany A. Roston - Apr 23, 2013
Energy Department expects Fisker to default, pulls funds from reserve account

On April 5, we reported that Fisker automotive had laid off 75-percent of its workforce, with a lawsuit following a few days later over the last-minute nature of the mass layoffs. The auto maker had run into a string of problems, and appeared to be making some last-ditch efforts to avoid bankruptcy. In light of this, the Department of Energy has taken $21 million from a reserve account, expecting the manufacturer to default on its loan.

The announcement was made Monday evening, with a statement released by the Department of Energy saying that in the light of the “obvious difficulties” Fisker is facing, the department has elected to pull the funds “on behalf of the taxpayer.” The money in the reserve account is from investors and sales, and will be applied to the amount of the loan. The action happened 12 days ago.

Like others before it, Fisker received an Advanced Vehicle Technology Loan as part of a federal program from green initiatives. The loan was for $529 million, but the auto maker only received $193 million of that before the Energy Department put a stop on the loan due to the manufacturer’s failure to meet specific requirements. The company was supposed to make its first loan payment this month.

Fisker hasn’t commented on the situation. According to the Wall Street Journal, the company has taken on the services of bankrupcty attorneys, but is seeking a way to stay in operation. Currently there is a lawsuit against the company by former employees who are seeking 60 days of wages and benefits, which they say they are owned because Fisker was required by law to supply a 60-day written notice ahead of the mass layoff.

[via Wall Street Journal]

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