Fisker creditors to receive $35 million
- Markell spokeswoman: "We are not expecting a substantial recovery of the state's investment."
- Gov. Jack Markell, Vice President Joe Biden and other top politicians hailed Fisker's arrival in October 2009
- Wanxiang purchased the Boxwood Road facility in Newport
Fisker Automotive's unsecured creditors, including the state of Delaware, will receive $35 million in cash and stock under terms of a new bankruptcy settlement. But Gov. Jack Markell warned Monday that taxpayers should expect little in return for the $20 million in state economic development incentives he used to lure the failed electric carmaker to Delaware.
"We are not expecting a substantial recovery of the state's investment," Markell spokeswoman Kelly Bachman said in a written statement Monday.
The Markell administration awarded Fisker $21.5 million in economic development incentives in 2010 to help reopen General Motors' shuttered Boxwood Road plant near Newport, and manufacture its second line of sporty hybrid sedans there.
Months of missteps, including missed production and sales targets related to its first line of sedans, the Karma, led instead to bankruptcy.
Under terms of the settlement filed Friday, Hong Kong billionaire Richard Li could receive $90 million, netting him a substantialprofit after he paid just $25 million for U.S.-backed loans to Fisker.
Settlement proceeds come from the $149 million that the Chinese auto parts giant Wanxiang Group paid to take over Fisker at a February auction, outbidding Li's company Hybrid Tech.
Wanxiang also purchased the Boxwood Road facility, where Fisker had planned to build a second line of hybrid-electric sedans. Wanxiang has pledged to restart production of Fisker's models, saying it will consider using the Delaware facility.
Delaware's claim to Fisker money, meanwhile, remains pooled among the unsecured creditors because the state's 2010 incentive package left state taxpayers third in line to collect on its Fisker investment – behind the federal government's loan and the private lender Silicon Valley Bank.
"The preliminary resolution of these claims between Hybrid Tech and the Unsecured Creditors Committee is another step in the bankruptcy process, but it is still too early to tell what recovery may be available to the Delaware Economic Development Authority and other creditors," Bachman said.
Unsecured creditors get $20 million in cash plus equity in Wanxiang affiliates valued at $15 million from the settlement, which also resolved legal disputes over unsecured claims. The settlement also includes $8 million for expenses and priority claims, including those submitted by former Fisker employees, court papers show.
"The committee is very pleased with the outcome," said Sunni Beville, a Boston lawyer with Brown Rudnick who represents a committee of unsecured creditors. "It's very nice to end the case on a very different note than it started. The recoveries here achieve a fair outcome."
The Fisker deal, once considered central to Markell's agenda, has become an unfortunate saga that often goes ignored in the governor's speeches about Delaware's economic progress in the years since Chrysler and GM closed auto plants in Newark and Newport within months of each other in 2008 and 2009.
Markell, Vice President Joe Biden and other top politicians hailed Fisker's arrival at an event inside the Boxwood Road plant in October 2009, predicting the company would boost the state's economic fortunes and breathe life into a cratering auto industry.
"This is seed money that will return back to the American consumer in billions and billions and billions of dollars in good new jobs," Biden said at the event.
Hopes soon were dashed, with Fisker missing sales and production targets on its Karma model, a $110,000 hybrid-electric sedan. Months of missteps led Fisker to lose access to its $529 million federal loan and the California-based carmaker filed for bankruptcy protection in November.
Contact Jonathan Starkey at (302) 983-6756,
on Twitter @jwstarkey or at jstarkey@delawareonline.com.