Commercial electric vehicle manufacturer, Electric Last Mile Solutions, has reportedly announced that it will file for bankruptcy, a year after it went public via a $1.4 billion merger with a special purpose acquisition company (SPAC).
As per the filing with the U.S. Securities and Exchange Commission (SEC), the startup plans on liquidating after a Chapter 7 bankruptcy process. The announcement supposedly comes three weeks after the firm warned that it was running dangerously low on cash.
Shauna McIntyre, the company’s president and interim CEO, stated that there were too many obstacles to overcome within the limited amount of time the firm had.
Electric Last Mile Solutions, known for its commercial EV named ‘Urban Delivery’, has been under investigation by the federal agency since March this year. Last year, the firm publicly listed itself on Nasdaq through a SPAC merger with Forum Merger III, instead of taking a more extensive route of a traditional IPO.
For the record, pre-revenue startups that went public via a SPAC merger in the last few years, before having sold a single vehicle, are facing various troubles such as Nasdaq de-listings, SEC investigations, resignations by top executives, or any other delay in bringing their product to market.
In February, the company’s President and CEO, James Taylor, and Chairman, Jason Luo, resigned after an internal investigation found that the two had purchased equity in the startup at significant discounts prior to the merger.
Following that, the SEC announced that it will conduct its own probe into Electric Last Mile Solutions, bringing down the startup’s shares to below $1. To cut down on expenses, almost a quarter of its staff was laid off.
Last month, the firm said it was also at risk of being delisted for delaying the filing of its 2021 annual report and Q1 2022 financial report.
The SEC is reviewing guidelines in order to bring SPACs on the same level as firms taking up a traditional IPO, with new regulations expected to be finalized in the second half of this year.
Consequently, many investment firms, such as Goldman Sachs, Credit Suisse, and Citigroup, have also either halted or restricted dealmaking. Few SPACs have also grounded or scrapped acquisition deals.