Nikola Corporation (NKLA, Financials) shares fell 38.8% to $0.47 on Wednesday at 12:07 PM GMT-5 after the company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware.
Under Section 363 of the U.S. Bankruptcy Code, the corporation intends to auction and liquidate its assets.
Pending court clearance, Nikola, which aimed to create zero-emission trucks, would keep restricted activities including repairing current cars and preserving select HYLA fuelling operations. These events are supposed to go until the end of March, after which other activities depending on outside partners will follow.
With about $47 million in cash, Nikola files for bankruptcy hoping to support continuous operations, pay for debt, and enable an asset sale. The business said that its decision to expedite the asset selling process was motivated by cash problems and the hefty bankruptcy expenses.
The management of Nikola blamed macroeconomic difficulties and state of the market for their financial difficulties. The corporation could not keep running even with efforts to generate money, lower debt, and save cash.
Trevor Milton started Nikola in Salt Lake City in 2014; it became public on June 4, 2020, after a merger with special purpose acquisition company VectoIQ Acquisition Corp. Not too long after, the business was under regulatory scrutiny, fraud claims surfaced, and Milton resigned as executive chairman.
