United States Bankruptcy Judge Kevin Gross has ruled that the February 12 auction for defunct Fisker Automotive would be between American unit of China's Wanxiang Group and Hybrid Tech Holdings, a company affiliated with Richard Li of Hong Kong. Fisker's committee of unsecured creditors has said it hopes to find more possible buyers before or on Feb. 7 deadline.
Gross also ruled that the attendance at the auction would be limited to the bidders, Fisker and a representative of the unsecured creditors committee. The auction will be held at the law offices of Kirkland & Ellis in New York. Li's legal team is appealing Gross's order last week that will require bids to include some cash.
Li had planned to acquire Fisker's assets through a “credit bid,” which entail forgiving what the company owes on a $168 million secured loan. Under that process, however, unsecured creditors might get next to nothing.
The US government granted the loan to boost the development of green vehicle technology. Li then acquired the loan for $25 million at a government auction in 2013. Gross has limited Li’s credit bid to that amount.
Li's lawyer, however, called the ruling a "terrible precedent." "Sometimes I'm right, and sometimes I'm wrong, and I think I'm right on this," Gross said defending his ruling. "It was argued I was setting new precedent. I think I'm really following the law." Gross said he would issue a written opinion of his credit bid ruling. Hybrid has said its initial bid would be worth $55 million.