Electric Last Mile Solutions Inc. said it plans to liquidate through a Chapter 7 bankruptcy process, a decision that comes almost one year after the electric-vehicle startup went public and just four months after both its chief executive officer and chairman resigned.
The Troy, Michigan-based company said in a statement late Sunday that its board and interim CEO, Shauna McIntyre, decided to liquidate after a review of Electric Last Mile’s products and plans turned up no better option for stockholders, creditors and other interested parties.
Electric Last Mile’s stock plunged 55% in premarket trading Monday to 23 cents a share as of 7:11 a.m. in New York. It was down 93% so far this year as of the close of trading last week.
The filing will make Electric Last Mile the first of the EV startups that merged with special purpose acquisition companies to go out of business amid the recent market slump. On May 27, the company had warned it might run out of cash this month. Its shares have fallen 93% this year, closing last week at 51 cents.
Founders James Taylor and Jason Luo had planned to import electric delivery vans from China and assemble them at a former General Motors Hummer factory in Mishawaka, Indiana. Both men resigned in early February after Electric Last Mile accused them of making improper stock purchases just before the company announced the SPAC merger in December 2020. The company listed on the Nasdaq in late June 2021 in a SPAC transaction that netted it about $379 million.
“I’m very disappointed by this outcome because our ELMS team demonstrated incredible determination to get our electric vans ready to meet the critical need for clean, connected vehicles that reduce carbon emissions from ground transportation,” McIntyre said in the statement. “Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us.”
Taylor, a former GM executive who once ran the Hummer brand, had served as CEO while Luo, a former CEO of Ford China, was chairman. The company’s market value had been as high as $1.4 billion shortly after it started trading, based on closing prices.
Electric Last Mile has struggled since the shakeup. Just one week after Taylor and Luo resigned, the startup’s auditor — BDO LLP — also quit. Electric Last Mile has operated without an auditor ever since and has yet to file its annual report for the year 2021 and its financial results for the first quarter of 2022, leaving it out of compliance with Nasdaq listing rules.
The company cut 24% of its workforce in March and disclosed that it was under investigation by the US Securities and Exchange Commission. All of these troubles combined “made it extremely challenging to secure a new auditor and attract additional funding,” the company said late Sunday.