Nikola Bankruptcy: Company to Sell Entire Business

Nikola Corporation Pursues Sale Amidst Bankruptcy Proceedings

Electric trucking innovator Nikola is aiming to divest its entire business operation as soon as April, legal representatives for the company informed a judge on Thursday during the initial hearing concerning its bankruptcy filing in Delaware.

Counsel for Nikola stated that the company has already identified a minimum of three prospective purchasers, though their identities remain undisclosed. Efforts are underway to attract further bids, with a likely deadline for submissions anticipated by late March.

Asset Liquidation as an Alternative

Should Nikola be unable to secure a buyer for the complete enterprise, the company will transition to a strategy of liquidating its assets individually, in an effort to address liabilities exceeding $1 billion. Nikola reports its total assets are valued between $500 million and $1 billion.

This hearing followed closely after Nikola’s filing for Chapter 11 bankruptcy protection and the announcement of its cessation as an independent entity. This marks a significant downturn for a company previously embroiled in controversy following the conviction of its founder, Trevor Milton, on multiple charges of securities fraud.

Previous Sale Attempts

Records from initial bankruptcy filings and statements made by legal counsel reveal that Nikola had been actively seeking a sale for several months prior to the bankruptcy declaration.

In a sworn statement, CEO Stephen Girsky detailed Nikola’s collaboration with Goldman Sachs, contacting 22 potential acquirers within the truck manufacturing and transportation logistics sectors. Interest was expressed by two international automotive manufacturers, though one ultimately withdrew from negotiations.

Further discussions with the remaining manufacturer concluded without a deal in late 2024.

Investment Solicitations and Challenges

Subsequently, Nikola engaged Houlihan Lokey to approach 24 financial investors, assessing interest in both standalone investments and partnerships with strategic investors. However, feedback indicated that a substantial capital infusion would be necessary to revitalize Nikola’s developing business.

In December 2024, Nikola initiated discussions with another international vehicle manufacturer regarding a potential acquisition, undertaking extensive due diligence over a four-week period. Unfortunately, this prospective buyer also ultimately decided against the purchase, a result Girsky characterized as “disappointing.”

Current Status and Potential Buyers

Now operating under bankruptcy protection, Girsky informed the court that Nikola is currently engaged in “active discussions” with at least three parties interested in acquiring the company. Furthermore, the company is actively marketing its most valuable assets, including its manufacturing facility in Coolidge, Arizona.

Chazz Coleman, legal counsel for Nikola in the bankruptcy proceedings, anticipates a relatively straightforward and uncomplicated process.

Timeline for Sale Process

Nikola intends to continue soliciting interest until approximately March 27, the initially proposed deadline for bid submissions, as stated by Joshua Morse, another attorney representing Nikola. An auction may be held around March 31, contingent upon the outcome of the bidding process.

A hearing to consider any potential sale is tentatively scheduled for the second week of April, with the transaction expected to finalize shortly thereafter.

Morse also noted an increase in inbound inquiries from potential buyers since the bankruptcy filing.

Bankruptcy Judge Thomas Horan observed that a bankruptcy filing often “crystallizes the market.”

Concerns Regarding Speed and Creditor Rights

The hearing primarily focused on the pace of the bankruptcy case. Nikola is prioritizing a swift resolution due to its limited cash reserves, currently around $47 million. Timothy Fox, representing the U.S. Trustee’s Office, emphasized the need for sufficient time to consult with Nikola’s creditors.

No definitive decisions were made regarding the timeline during the hearing.

Support for Expedited Process

Interestingly, Nikola received support for an expedited process from a group of shareholders who had previously filed a lawsuit against the company over four years ago.

These plaintiffs recently achieved class-action status and reached a settlement agreement with Nikola shortly before the bankruptcy filing. Their claim represents the fourth-largest creditor claim in the bankruptcy, totaling approximately $13 million.

Joe Barsalona, representing the class-action plaintiffs, argued that, given Nikola’s diminishing cash position, “it is imperative to our client that this case move rapidly.”

Barsalona likened the situation to a “melting ice cube.”