Bankrupt EV Maker Fisker's Liquidation Plan Hits Roadblock As DOJ Raises Objections Following SEC Investigation

The U.S. Department of Justice on Monday raised objections to bankrupt EV maker Fisker‘s liquidation plan on behalf of the auto safety regulator National Highway Traffic Safety Administration (NHTSA), noting that automakers cannot charge customers for repairs of safety-related issues identified with their vehicles.

What Happened: The DOJ’s court filing dated Oct. 7 noted that an auto manufacturer must remedy any safety issues identified with their vehicles at no cost to the customer.

Fisker, the filing noted, has identified five safety-related issues, three of which were fixed by over-the-air software updates, and the remaining two that require physical repairs.

The liquidation plan put forth by Fisker, the filing said, puts the onus of covering labor expenses for the physical repairs on the drivers. The vehicle owners might be reimbursed at some point in the future, as per the plan. Charging customers, however, is in violation of the provisions of the National Traffic and Motor Vehicle Safety Act, the DOJ noted.

Why It Matters: Earlier this week, it was reported that the U.S. Securities and Exchange Commission (SEC) also raised objections to Fisker’s liquidation plan.

The SEC said that it has an ongoing police and regulatory interest in Fisker's books and records and may need to request or subpoena additional documents in the future. The liquidation plan put forth by the company in September, however, does not specify which books and records will be transferred to whom, the regulator alleged.

Fisker filed for bankruptcy in June after burning through cash in an attempt to scale production and sales of its Ocean SUV. Since then, the company has sold most of its electric vehicle fleet.

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Photo courtesy: Fisker