Commercial electric vehicle maker Electric Last Mile Solutions said Monday it will file for bankruptcy, the first in a series of SPACs of troubled electric vehicle makers to close. Electric Last Mile Solutions, which went public in June 2021 through a $1.4 billion merger with Forum Merger III, plans to liquidate through Chapter 7 bankruptcy proceedings, according to a filing with the Securities and Exchange Commission. and US Securities. The company, which had been developing a commercial electric vehicle called Urban Delivery, has been investigated by the SEC since March. “Unfortunately, there were too many hurdles to overcome in the short time available to us,” Shauna McIntyre, CEO and interim president, said in a statement. The bankruptcy announcement comes three weeks after the company warned it was in danger of running out of cash, and less than a year after it launched on the Nasdaq by merging with a special purpose acquisition company, rather than taking the most rigorous route required of a traditional IPO. Allowing non-revenue-generating start-ups to take a shortcut to an IPO before selling a single vehicle has led to problems on numerous fronts. In addition to Electric Last Mile Solutions, other electric vehicle manufacturers that went public by merging with a SPAC in recent years, including Faraday Future, Lordstown Motors, Lucid Motors, Nikola and Canoo, have faced SEC investigations, removal of Nasdaq listings, executive resignations, and other delays and blockages in your travels to bring a vehicle to market. The SEC is currently reviewing guidelines to bring SPACs on par with companies seeking a traditional IPO and expects to finalize new guidelines during the second half of 2022. Meanwhile, some players in the market, including Goldman Sachs , Credit Suisse and Citigroup, have paused or limited trading. Of the roughly 600 SPACs currently looking for a company to acquire, some deals have been stalled or scrapped, according to SPAC Research. By all accounts, it’s been a tough year for Electric Last Mile Solutions. The company’s two top leaders, Chairman and CEO James Taylor and Chairman Jason Luo, resigned in February when an internal investigation found they had bought shares in the company at substantial discounts before the company’s merger. The SEC announced its own investigation into Electric Last Mile Solutions shortly after, sending its shares below $1. The company laid off nearly a quarter of its workforce to cut costs and got guidance for the rest of 2022. In May, Electric Last Mile Solutions said it was also at risk of being delisted due to delays in filing its 2021 annual report and the financial report for the first quarter of 2022. report. The company blamed the delay on its former accounting firm BDO, which it accused of helping Taylor and Luo devise the plan to buy shares at a discount before the merger. Electric Last Mile Solutions has been without an auditor since the public dispute, a longer gap than any other public company. “It’s extremely frustrating that we have to go down this road,” said Brian Krzanich, the company’s chairman and former CEO of Intel, “but it was the only responsible step for our shareholders, partners, creditors and employees.”
