EV maker Electric Last Mile Solutions files for Chapter 7

August 2022 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

August 2022 Issue

Twelve months after its initial public offering (IPO), electric vehicle (EV) company Electric Last Mile Solutions, Inc. (ELMS) has filed for Chapter 7 bankruptcy.

The move follows the resignations, in February 2022, of Jim Taylor, ELMS’ chief executive, and Jason Luo, the company’s founder and former executive chairman, after an internal probe uncovered a series of improper stock purchases.

Following the departure of Mr Taylor and Mr Luo, the company appointed board member Shauna McIntyre as interim chief executive and president, partly because of her considerable automotive experience.

The ELMS board and the new leadership team under Ms McIntyre then launched a comprehensive review of the company’s products and commercialisation plans, instilled a culture of safety and focused the workforce on producing quality vehicles.

This process included assessing the company’s planned product offerings, production plans and certification processes, including the feasibility of meeting previously announced targets. ELMS has also continued to work aggressively on raising new sources of capital, while working closely with advisers to assess and improve its liquidity position.

Ultimately, however, the ELMS board determined, following a comprehensive review with the assistance of outside advisers, and upon the recommendation of the company’s management, that it is in the best interest of the company and the company’s stockholders, stakeholders, creditors and other interested parties to file for Chapter 7.

“For the past several months, the ELMS board and the new ELMS leadership team have worked nonstop to address legacy financial, governance and operational matters at the company, and enormous progress was made, including towards vehicle certification,” said Brian Krzanich, chair of the ELMS board and former chief executive of Intel. “Therefore, it is extremely frustrating that we must take this route, but it was the only responsible next step for our shareholders, partners, creditors and employees.”

The compound effect of these events, along with an investigation by the Securities and Exchange Commission (SEC) into prior filings, including ELMS disagreements with an accounting firm and its compliance with Nasdaq listing rules, made it extremely challenging for ELMS to secure a new auditor and attract additional funding.

“I am 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,” added Ms McIntyre. “Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us.”

Founded in 2020, ELMS aimed to redefine the fleet transportation industry with its vertically-integrated approach to designing, manufacturing and customising electric last mile delivery vehicles. Its first vehicle, the Urban Delivery, was anticipated to be the first Class 1 commercial electric vehicle in the US market.

“I could not be prouder of what our team has been able to accomplish under very challenging circumstances,” concluded Ms McIntyre. “This is a viable and essential technology, and I am confident that many of our talented employees will play a future role in this energy transition effort.”

Fraser Tennant