Battery-electric delivery van startup Electric Last Mile Solutions (ELMS) has filed for bankruptcy liquidation, ending a long slide that included insider trading, an SEC investigation and a bear market that is pummeling newly public transportation companies.
“Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us,” Shauna McIntyre, interim CEO and president, said in a press release.
In an 8-K filing Sunday with the Securities and Exchange Commission, ELMS said its board and outside advisers determined a Chapter 7 liquidation filing was the best solution after the company was unable to attract new investment.
ELMS shares tumble
ELMS stock tumbled 61.59% on Monday to close at 20 cents a share on the Nasdaq. The exchange told the company on Friday it had 180 days to get its stock price above $1 a share or face delisting. Shares fell an additional 2.76% after hours to 19 cents.
ELMS went public a year ago this month following a December 2020 merger with Forum Merger III Corp., The deal was valued at $1.4 billion. ELMS received $379 million in gross proceeds when the business combination closed on June 28.
Monday was a horrific day overall for electric and autonomous transportation companies that became public through special purpose acquisition companies created to merge with young companies and take them public.
Embark Technology (NASDAQ: EMBK), the maker of autonomous trucking software, fell 15.79% to 64 cents a share.
Nikola Corp., (NASDAQ: NKLA) one of the early SPAC mergers, which has fought through a raft of troubles and agreed to pay the SEC $125 million in a fine over fraud allegations against its founder, lost 13.41% to close at $5.23, less than 50 cents higher than its 52-week low.
Raft of woes
ELMS was already reeling. Last week, it said that former CEO James Taylor, a veteran automotive executive who co-founded the company, had failed to repay shares in the company that an internal investigation found were purchased through insider trading.
The ELMS business plan included building Class 1 last-mile electric delivery vans with imported bodies from China that would be married to electric chassis at a former General Motors plant in Mishawaka, Indiana.
The owner of the Mishawaka plant agreed to cut mortgage payments on the plant for four months while the company tried to raise new funding.
Board members tender resignations
“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, ELMS non-executive board chair and former CEO of Intel.
“Therefore, it’s extremely frustrating that we must take this route, but it was the only responsible next step for our shareholders, partners, creditors and employees.”
The company is completing preparations for the Chapter 7 case, which will be managed by a trustee. McIntyre, Krzanich and Richard N. Peretz, who retired in 2020 as senior vice president, chief financial officer and treasurer of United Parcel Service, tendered their resignation as board members effective when the bankruptcy trustee takes control of ELMS’ affairs.