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HomeAutomotiveSome EV charging station maker files Chapter 11 bankruptcy.

Some EV charging station maker files Chapter 11 bankruptcy.

In a competitive market, automakers have been vying with Tesla (TSLA), the leader in the electric car business, for EV sales. According to Kelley Blue Book, companies sold 1.2 million electric vehicles in the United States in 2023, or just 7.6% of all vehicle sales.

Many EV manufacturers have found it challenging to compete for that tiny portion of the auto sales pie, to the point where some have declared bankruptcy.

Lordstown bankruptcy confirmed

The EV manufacturer Lordstown Motors, located in Lordstown, Ohio, filed for Chapter 11 bankruptcy in July 2023 in order to restructure and sell its assets. On March 5, after more than seven months of reorganization, the debtor received confirmation of its Chapter 11 plan and was scheduled to come out of bankruptcy.

Businesses are also experiencing issues abroad. Arrival, a British electric vehicle company, filed for bankruptcy in the United Kingdom’s administration court in February without ever having sold a vehicle. The company did not have any sales, but it did have ambitions to offer a bus, a huge van, and cars for ride-hailing services.

Another significant American supplier of EV infrastructure filed for bankruptcy, intending to come out of it with a stronger business.

The manufacturer of charging stations will turn over business to the lender.

Charge Enterprises, a manufacturer of electric vehicle charging stations, filed for prepackaged Chapter 11 bankruptcy on March 7 in the U.S. Bankruptcy Court for the District of Delaware. The company also intends to transfer 100% ownership of the business to Arena Investors, the prepetition lender, after the debtor was unable to redeem approximately $9.9 million of its assets from investment adviser Korr Acquisitions Group in November 2023 due to an alleged breach of fiduciary duties.

According to court documents, Korr also declined to buy $5 million worth of Charge common stock under a securities purchase agreement signed on August 11, 2023.

According to court documents, due to Korr’s refusal to purchase the stock and the withholding of the investment funds, Charge was unable to pay Arena $25.8 million in non-convertible notes that matured on November 19, 2023. Arena sent notices of default to the debtor in November.

On January 8, 2024, the debtor with a New York address filed a case in the Supreme Court of New York against Korr and its inventor, Kenneth Orr, citing, among other things, unjust enrichment, constructive trust, conversion, and fraud in the inducement. Charge is requesting equitable relief, damages above $15 million, and a temporary restraining order and injunction to prevent any further division or transfer of Charge’s property.

In its petition, the debtor declared assets of $114.3 million and liabilities of $48.7 million.

Charge retained Piper Sandler in January 2024 to pursue a bankruptcy sale of the equity of its internet and wireless, electrical contracting services, electric vehicle charging, and fleet services in order to sell all of the debtor’s operating non-debtor companies. This was done before filing for Chapter 11.

According to court documents, the debtor did, however, determine that it was in its best interests to pursue a prepackaged bankruptcy with a sale to its lenders. In accordance with the prepack, the debtor would also ask its prepetition lenders for $10 million in debtor-in-possession financing, of which $4 million would be made available right away upon approval of an interim order and the remaining $6 million upon a final DIP order.

Arena would get all of the newly reorganized debtor’s common stock under the terms of the prepack and unimpaired general unsecured claims, but preferred and common equity would not be allocated. According to court documents, the debtor is asking for a prompt certification of its Chapter 11 plan on April 24, 2024, or as soon as is reasonably possible after that.

Charge has been growing its company in 2023 since it announced on August 1st that it had paid up to $15 million to acquire Greenspeed Energy Solutions, a supplier of solar, energy storage, and charging infrastructure.

Later, on August 28, Charge and Stellantis (STLA) came to an arrangement for Charge to become an EV charging installation partner for the Big 3 car company’s network of more than 2,600 U.S. dealers.

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