Michigan based commercial vehicle developer Electric Last Mile Solutions has announced the company plans to file for Chapter 7 bankruptcy. A Chapter 7 bankruptcy case is where the bankruptcy trustee gathers and sells the debtor’s assets and uses the proceeds to pay creditors in accordance with the provisions of the Bankruptcy Code.
The announcement follows the resignations in February of Jim Taylor, the Company’s former Chief Executive Officer, and Jason Luo, the Company’s founder and former Executive Chairman.
Following their resignations, the ELMS Board and the new leadership team under Shauna McIntyre as interim CEO and President, launched a comprehensive review of the company’s products and commercialisation plans. This included assessing the company’s planned product offerings, production plans, and certification processes, including the feasibility of meeting previously announced targets.
Based on the findings ELMS was forced to withdraw financial guidance and declare the company’s past financial statements unreliable. The compound effect of these events, along with a pending Securities and Exchange Commission (SEC) investigation initiated this year, made it extremely challenging to secure a new auditor and attract additional funding.
The Company says it “continued to work aggressively on raising new sources of capital, while working closely with advisors to assess and improve its liquidity position. Ultimately, the board determined, following a comprehensive review with the assistance of the company’s outside advisors, and upon the recommendation of the company’s management, that it is in the best interest of the company and the company’s stockholders, stakeholders, creditors, and other interested parties to file for Chapter 7 relief.”
Shauna McIntyre said, “I’m very disappointed by this outcome because our ELMS team demonstrated incredible determination to get our electric vans ready to meet the critical need for clean, connected vehicles that reduce carbon emissions from ground transportation.
“Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us. I could not be prouder of what our team has been able to accomplish under very challenging circumstances. This is a viable and essential technology, and I am confident that many of our talented employees will play a future role in this energy transition effort.”
“For the past several months, the ELMS board and the new ELMS leadership team have worked nonstop to address legacy financial, governance and operational matters at the company, and enormous progress was made, including towards vehicle certification” said Brian Krzanich, ELMS Board Chair and former CEO of Intel. “Therefore, it’s extremely frustrating that we must take this route, but it was the only responsible next step for our shareholders, partners, creditors, and employees.”