Fisker Folds to Hybrid Technology LLC

They’re $103,000 electric hybrid Karma sports car was hot - garnering attention from a number of celebs including Justin Bieber and Ashton Kutcher - but it simply wasn’t hot enough. The seven year old firm Fisker announced recently that it is filing for Chapter 11 bankruptcy, defaulting on the estimated $1.2 billion it owes venture-capitalists and creditors, and turning over its remains to Hybrid Technology, LLC.

“After having evaluated and pursued all other alternatives, we believe the sale to Hybrid and the related Chapter 11 process is the best alternative for maximizing Fisker Automotive’s value for the benefit of all stakeholders,” relayed Fisker chief restructuring office Marc Beilinson.

Who is Hybrid Technology?

Hybrid, a firm still in it’s infancy, won Fisker’s defaulted taxpayer loan with a $25 million bid at a U.S. Energy Department auction. Interestingly enough, Hybrid came into existence only weeks after the Energy Department’s intent to auction the taxpayer loan was announced. While there is no available information on its officers, reliable resources have reported that the takeover power will include Richard Li, son of Hong Kong’s richest tycoon.

Though the exact terms of the deal will remain closed to the public, U.S. taxpayers are sure of one thing: they lost $139 million of the $192 million that Fisker received as part of a $529 million loan commitment from the US government intended to spark further progress in the alternative-energy vehicle industry.

Fred Upton of Michigan and Tim Murphy of Pennsylvania, both Republican Representatives, were quick to condemn the Energy Department and its loan program after the bankruptcy announcement was made: “Fisker’s collapse closes yet another sad chapter in DOE’s troubled portfolio. The jobs that were promised never materialized and, once again, taxpayers are on the hook for the administration’s reckless gamble.”

Fisker Bankruptcy: What Does All of This Mean?

Well, a few things. The bad news is that Fisker was the largest of three start-up hybrid firms who received said loans from the DOE. That they couldn’t survive, let alone thrive, and consequently defaulted on their loans will likely make taxpayers increasingly nervous about making such loans again in the future. In fact, legislation has already been entered into the U.S. Senate to prevent the vehicle-lending program from providing additional loans with the $15 billion still allocated for such activities.

What’s more, venture capitalists may now see bigger risks in regard to such “green” technology investments. Though Fisker faced some unique challenges - like losing all of their stock in Hurricane Sandy and being unable to recoup the losses from their insurance agency - they are the second of the three aforementioned government-backed startups to fail.

So, while there’s little question that Hybrid and other firms will continue to develop alternative-energy vehicles, the issue of funding may become a more significant barrier to entry for other new players, thereby slowing the industry’s innovative process as a whole. That said, if Li’s involvement is confirmed, such foreign interests could spur some private niche lenders to dig deeper on the riskier odds.