Electric Last Mile Solutions Inc. said it plans to liquidate through a Chapter 7 bankruptcy process. This decision comes almost a year after the electric vehicle startup went public and just four months after both its CEO and chairman quit.
In a statement released late Sunday, the Troy, Michigan-based company said that its board and interim CEO, Shauna McIntyre, had decided to liquidate after a review of Electric Last Mile’s products and plans showed that stockholders, creditors, and other interested parties had no better options.
With the filing, Electric Last Mile will be the first of the EV startups that merged with special purpose acquisition companies to go out of business because of the recent drop in the market. The company said on May 27 that it might run out of money this month. Its shares have dropped 93 percent this year and were worth 51 cents at the end of last week.
The company’s founders, James Taylor and Jason Luo, wanted to get electric delivery vans from China and put them together at a former General Motors Hummer factory in Mishawaka, Indiana. Both men quit at the beginning of February after Electric Last Mile accused them of buying stock in the wrong way right before the company announced that it would merge with SPAC in December 2020. Late in June 2021, the company went public on the Nasdaq. This was done through a SPAC transaction, which brought in about $379 million.
McIntyre said in the statement, “I’m very disappointed by this result because our ELMS team worked so hard to get our electric vans ready to meet the critical need for clean, connected vehicles that reduce carbon emissions from ground transportation.” “Unfortunately, we didn’t have enough time to get past all of the problems we ran into.”
Taylor, a former GM executive who once ran the Hummer brand, was CEO while Luo, a former CEO of Ford China, was chairman. Based on closing prices, the market value of the company reached as high as $1.4 billion not long after trading began.
Since the change, Electric Last Mile has been having trouble. Just one week after Taylor and Luo quit, BDO LLP also quit as the startup’s auditor. Since then, Electric Last Mile hasn’t had an auditor and hasn’t turned in its annual report for 2021 or its financial results for the first quarter of 2022. This means it isn’t following the rules for being listed on the Nasdaq.
In March, the company laid off 24% of its employees and told the public that it was being looked into by the US Securities and Exchange Commission. All of these problems together, the company said late Sunday, “made it very hard to find a new auditor and get more money.”