Fisker Automotive fired most of their rank-and-file employees today, April 5, in a desperate act to conserve money and prevent a potential bankruptcy filing according to a report by Reuters.
Fisker confirmed that 160 employees or approximately 75 percent of the company will be let go in what the company has called "a necessary strategic step in our efforts to maximize the value of Fisker's core assets."
The company has "at least" $30 million in cash, plus $15 million due after settling a claim this week with bankrupt battery maker A123 Systems, according to a source familiar with the company's finances. They've also raised $1.2 billion from investors and have taken approximately $200 million in government loans according to Reuters.
The company is struggling to reach a financial deal with an investor that would save the auto maker known for its Karma hybrid sports vehicle.
"The company regrets having to terminate any of its hard-working and talented people. But this was a necessary strategic step in our efforts to maximize the value of Fisker's core assets," the company said in a press statement according to the Associated Press.
The 160 employees were notified in a meeting at Fisker's Anaheim, California, headquarters, according to a second source who attended the meeting. They were also notified that the company couldn't afford to give them a severance package.
Fisker asked 53 senior managers and executives to stay in order to go after potential buyers for the company's assets according to Reuters.
Kirkland & Ellis were hired by the company to advise them on potential bankruptcy filings. The company is looking to renegotiate a DOE payment of approximately $10 million that is due no later than April 22.
Fisker was founded in 2007 and has the backing of managing partner of venture firm Kleiner Perkins Caufielf & Buyers Ray Lane. In 2009 the company was awarded $529 million as part of the Obama administration program to help advanced vehicle development.
Actor Leonardo DiCaprio, who is an investor, and singer Justin Bieber have both back the company as well largely due to their love for the Karma.
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