Electric Last Mile Solutions files for bankruptcy – TechCrunch

Electric Last Mile Solutions files for bankruptcy – TechCrunch

Electric Last Mile Solutions files for bankruptcy – TechCrunch

Commercial EV maker Electric Last Mile Solutions said Monday it will file for bankruptcy, the first of a wave of troubled EV manufacturer SPACs going bankrupt.

Electric Last Mile Solutions, which went public in June 2021 through a $1.4 billion merger with Forum Merger III, plans to liquidate through a Chapter 7 bankruptcy lawsuit, according to a filing with the U.S. Securities and Exchange Commission . The company, which had developed a commercial electric vehicle called the Urban Delivery, has been under investigation by the SEC since March.

“Unfortunately, there were too many obstacles to overcome in the short amount of time available to us,” Shauna McIntyre, interim CEO and president, said in a statement.

The bankruptcy announcement comes three weeks after the company warned it was in danger of running out of cash, and less than a year after it launched on the Nasdaq by merging with a special-purpose acquisition company, rather than going the more rigorous way. required for a traditional IPO.

Allowing pre-revenue start-ups to take a shortcut to an IPO before selling a single vehicle has created problems on a number of fronts. In addition to Electric Last Mile Solutions, other EV makers that have gone public in recent years by merging with a SPAC — including Faraday Future, Lordstown Motors, Lucid Motors, Nikola and Canoo — have faced SEC investigations, Nasdaq- de-listings, executive layoffs, and other delays and roadblocks in their travel to market a vehicle.

The SEC is currently reviewing guidelines to align SPACs with companies pursuing traditional IPOs and expects to finalize new guidelines in the second half of 2022. Meanwhile, some players in the market, including Goldman Sachs, Credit Suisse and Citigroup, have taken hiatus or limited dealmaking. Of the approximately 600 SPACs currently looking for a company to acquire, some deals have stalled or been scrapped, according to SPAC Research.

It was a difficult year for Electric Last Mile Solutions in every way.

The company’s two top leaders, President and CEO James Taylor and Chairman Jason Luo, resigned in February after an internal investigation revealed that they had purchased stock in the company at significant discounts prior to the company’s merger. The SEC shortly after announced its own investigation into Electric Last Mile Solutions, which caused its shares to fall below $1. The company laid off nearly a quarter of its staff to cut costs and withdrew its guidelines for the remainder of 2022.

In May, Electric Last Mile Solutions said it was also at risk of being scrapped due to delays in filing its 2021 annual report and Q1 2022 financial report. The company blamed the delay on its former accounting firm BDO, which it accused Taylor and Luo in setting up the plan to buy shares at a discount before the merger. Electric Last Mile Solutions has run without an accountant since the public spat, a gap wider than any other public company.

“It’s extremely frustrating that we have to go down this road,” said Brian Krzanich, chairman of the company’s board of directors and former CEO of Intel, “but it was the only responsible next step for our shareholders, partners, creditors and employees. .”