Bankrupt Nikola Plans to Sell Entire Business by April: What This Means for the Future
Nikola, the electric trucking startup, is currently navigating a significant transition as it aims to sell its entire operation amid Chapter 11 bankruptcy proceedings. During a recent hearing in Delaware, company lawyers revealed that Nikola has at least three potential buyers and is actively seeking additional bids, with a submission deadline expected by the end of March.
Bankruptcy Filing and Business Sale Plans
Following its Chapter 11 bankruptcy filing, Nikola is pivoting its strategy. If the company cannot find a buyer for the entire business, it will consider liquidating its assets to address over $1 billion in liabilities. Nikola’s assets are estimated to be between $500 million and $1 billion.
Background on Nikola’s Challenges
The recent developments come on the heels of a tumultuous period for Nikola, which included the conviction of its founder, Trevor Milton, on multiple counts of securities fraud. The company had been exploring sale options for several months prior to its bankruptcy filing.
Current Progress in Selling Nikola
According to CEO Stephen Girsky, Nikola has collaborated with Goldman Sachs to identify potential acquirers. Discussions involved:
- Engaging with 22 potential buyers in the truck manufacturing and logistics sectors.
- Receiving interest from two international automotive manufacturers, although one ultimately withdrew.
- Exploring various term sheets with a second interested party, which also later backed out.
In December 2024, Nikola conducted due diligence with another international vehicle manufacturer, but this opportunity also fell through.
Active Discussions and Asset Marketing
Despite these setbacks, Girsky assured the court that Nikola is in active discussions with at least three interested parties for a full acquisition. The company is also marketing high-value assets, including its factory located in Coolidge, Arizona.
Next Steps in the Bankruptcy Process
As of now, Nikola plans to continue soliciting interest until approximately March 27, with an intended auction around March 31. A hearing regarding any potential sale is anticipated in the second week of April, following which the transaction could close shortly thereafter.
Increased Buyer Interest Post-Bankruptcy
Interestingly, interest from potential buyers has reportedly increased following Nikola’s bankruptcy filing. Bankruptcy judge Thomas Horan noted that such filings often clarify market interest.
Urgency for a Swift Resolution
With approximately $47 million in cash reserves, Nikola is pushing for a rapid resolution to its bankruptcy case. However, the U.S. Trustee’s Office is seeking sufficient time to meet with the company’s creditors.
Notably, a group of shareholders who filed a lawsuit against Nikola over four years ago has emerged as significant creditors, with claims totaling about $13 million following a recent settlement.
Joe Barsalona, representing the class-action plaintiffs, emphasized the urgency to expedite the bankruptcy process, stating, “It is imperative to our client that this case move rapidly.” He described the situation as akin to a “melting ice cube,” highlighting the critical need for timely action.
For further updates on Nikola’s bankruptcy proceedings and potential acquisition, stay tuned to our Business News section.
