May 1, 2013 at 3:04 PM ET
Coda Holdings, parent of the electric-car maker backed by billionaire Philip Facone, has filed for bankruptcy and will seek to sell its assets.
Coda Holdings shut down its automotive unit last year after failing to make good on its promise to sell 10,000 vehicles. The company sold fewer than 100 vehicles while employing 40 people. It will instead focus on its energy storage business, said Phil Murtaugh, chief executive officer of the Los Angeles-based company in a statement.
The company introduced its five-passenger electric car in California a year ago with a range of 125 miles on a single charge. The $37,250 vehicle was based off a years-old vehicle design and was panned for its bland styling. It also suffered from a recall of faulty airbags.
Coda aims to sell its assets to a group led by a Fortress Investment Group. The consortium of lenders would provide debtor-in-possession financing to allow the company’s energy storage business to remain operational during the restructuring process, he said.
Coda filed a motion with the bankruptcy court in Delaware for approval of the consortium to acquire the company post-bankruptcy. In addition, the company will seek to monetize value of its existing automotive business assets.
“After concluding a comprehensive review of our strategic options, the board of directors. management team and senior lending group have concluded that focusing on the company’s energy storage business presents the best opportunity moving forward,” Murtaugh said.
“We believe the restructuring process that we have entered into today will enable the company to complete a sale and confirm a plan that maximizes the value of its assets, serving the best interests of our stakeholders.”
Coda diversified its business and formed Coda Energy two years ago. Coda Energy’s products are based on the same core technology.
Coda Automotive listed assets of as much as $50 million and liabilities of as much as $100 million in the Chapter 11 bankruptcy filing. The company said it would separately try to sell the unit within 45 days.
A U.S. congressional committee is investigating the Energy Department’s loans for alternative-fuel vehicles after several manufacturers have been plagued by financial problems. Fisker Automotive fired three quarters of its work force last month and missed its first payment on a U.S. government loan and is thought to be contemplating bankruptcy, while Bright Automotive filed for bankruptcy and liquidation last year in the face of continuing financial difficulties.
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