Commercial EV maker Electric Last Mile Solutions said Monday it would file for bankruptcy, the first of a series of troubled EV manufacturers SPACs go out of business.
Electric Last Mile Solutions, which went public in June 2021 through a $1.4 billion merger with Forum Merger III, plans according to a submission with the US Securities and Exchange Commission. The company, which developed a commercial electric vehicle called Urban Delivery, has been under investigation by the SEC since March.
“Unfortunately, there were too many obstacles for us to overcome in the short time we had,” Shauna McIntyre, interim CEO and president, said in a statement.
The bankruptcy announcement comes three weeks after the company warned it could run out of cash and less than a year after it went public on the Nasdaq through its merger with a special purpose vehicle, rather than taking the more rigorous route required by a classic IPO.
Allow Pre-Revenue Startups to take a shortcut to an IPO beforehand Sale of a single vehicle has caused problems on a number of fronts. In addition to Electric Last Mile Solutions, other EV makers that have gone public via merger with a SPAC in recent years — including Faraday Future, Lordstown Motors, Lucid Motors, Nikola and Canoo — have faced SEC investigations, Nasdaq delistings , executive resignations and other delays and roadblocks in their journeys to get a vehicle to market.
The SEC is currently Check policies to bring SPACs on par with companies seeking a traditional IPO and expects to finalize new guidance in the second half of 2022. Meanwhile, some market participants, including Goldman Sachs, Credit Suisse and Citigroup, have suspended or restricted business operations. Of the 600 or so SPACs currently looking for a company to acquire, some deals have stalled or been scrapped SPAC research.
All in all, it’s been a tough year for Electric Last Mile Solutions.
The company’s two top executives, President and CEO James Taylor and Chairman Jason Luo resigned in February when an internal investigation revealed that prior to the company’s merger, they had acquired shares in the company at significant discounts. The SEC announced its own investigation into Electric Last Mile Solutions shortly thereafter, sending its shares below $1. The company laid off nearly a quarter of its workforce to cut costs and withdrew guidance for the remainder of 2022.
In May, Electric Last Mile Solutions said it was also at risk of being delisted over delays in filing its 2021 annual report and first-quarter 2022 financial report. The company blamed the delay on its former accounting firm BDO, which was accused of helping Taylor and Luo plan the plan to buy discounted shares before the merger. Electric Last Mile Solutions has gone public without an auditor, a hiatus longer than any other public company.
“It is extremely frustrating that we have to take this path,” said Brian Krzanich, the company’s chairman and former Intel CEO, “but it was the only responsible next step for our shareholders, partners, creditors and employees.”
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