Electric vehicle manufacturer Nikola Corporation today (20 February) obtained approval of several typical operational motions at its first day hearing, and the company’s bankruptcy judge also signed off on shortened notice for the bid procedures motion.

Judge Thomas Horan of the US Bankruptcy Court for the District of Delaware agreed to approve motions today including authorizing the company to pay employees and critical vendors, as well as continuing to use its cash management system and offer customer programs. Additionally, Judge Horan agreed to schedule a bid procedures hearing on shortened notice, setting the hearing for 7 March. The debtors initially asked for a 5 March hearing, but the court did not have availability on that day.

Today’s brief court hearing went smoothly, with no opposition to the motions up for approval.

Nikola filed for Chapter 11 early on Wednesday morning (19 February) to pursue an in-court sale process after multiple investment bankers’ efforts to yield a prepetition sale failed. Alongside the Chapter 11 petition, the company filed a bid procedures motion outlining a sale process that would largely take place in March. Rather than funding the bankruptcy with debtor-in-possession financing or lenders’ cash collateral, the debtors intend to use cash on hand to fund the case, according to a first day declaration. In the declaration, President and CEO Stephen Girsky said Nikola has about USD 47m in cash on hand to fund limited operations, implement the postpetition sale process and exit Chapter 11 through a plan.

In addition to about USD 97.7m in total funded debt and other obligations – including USD 44.2m in convertible notes and USD 53.5m in other various financing obligations – Nikola owes significant obligations to the Securities and Exchange Commission (SEC) due to a settlement that resulted from the agency’s investigations into the company. As of 30 September 2024, the company owes USD 80.3m in accrued expenses and other current liabilities out of the total USD 125m civil penalty from the SEC.

In the bid procedures motion, the company proposed a 27 March bid deadline, a 31 March auction and a 3 April sale hearing. Assuming the court approves the bid procedures, Judge Horan noted that he does not have 3 April available for a hearing, so he offered 10 April as an alternative option.

Photo: Nikola Corporation