On April 21, 2023, ABI’s Asset Sales Committee announced that the 2022 Asset Sale of the Year was awarded to the case of In re Electric Last Mile Solutions Inc., et al. (Bankr. D. Del. Case 22-10537-MFW), for the sale of substantially all its assets to Mullen Automotive, Inc. (NASDAQ: MULN).
Electric Last Mile Solutions, Inc. and its subsidiary, Electric Last Mile, Inc. (together, "ELMS"), jointly filed for chapter 7 relief in Delaware on June 14, 2022. ELMS was a commercial electric vehicle solutions company founded for the purpose of designing, engineering, manufacturing and customizing electric delivery and utility vehicles. The company was headquartered in Troy, Mich., and operated a production facility in Mishawaka, Ind. ELMS had been in the process of designing and engineering two unique products: the Class 1 Urban Delivery vehicle, and the Class 3 Urban Utility vehicle. The company anticipated being the first provider of Class 1 electric vehicles in the U.S. market.
The company was formed on June 25, 2021, through a reverse merger between Electric Last Mile, Inc. and a special purpose acquisition company (SPAC) and subsequently began trading on NASDAQ. With a 675,000-square-foot production facility and a team of more than 200 employees, the company began executing its strategic plan of delivering an electric vehicle alternative to the last mile segment. Although ELMS generated demand from customers in all core end markets within the first six months and reached a record market cap of $1.4 billion, the company faced hardships in its inaugural year as a public company. These included an investigation by the SEC, the resignation of the company’s auditor prior to the filing of its FY2021 annual report, and a series of supply-chain issues that delayed vehicle production. The culmination of these issues, among others, contributed to the company’s inability to support future operations, resulting in ELMS filing for chapter 7 relief.
The deal professionals were retained by the chapter 7 trustee to conduct a comprehensive marketing process and solicit offers for substantially all assets, both whole and in parts. The assets to be sold included the manufacturing facility, personal property (i.e., inventory, vehicle assembly machinery and equipment, office equipment, furniture and fixtures, computer and IT equipment, and corporate vehicles) and intangible assets (i.e., trademarks, trade names, patent rights and long-term supplier agreements). After canvassing a wide range of investors and receiving significant interest from multiple parties, Mullen Automotive, Inc. was selected as the stalking horse with a bid valued in excess of $100 million. Following an expedited remarketing of the stalking-horse bid and the receipt of an alternative offer, the stalking-horse bid was ultimately determined to be the highest and best offer.
The sale was approved on Oct. 13, 2022, and closed on Nov. 30, 2022, pursuant to a § 363 sale process in the U.S. Bankruptcy Court for the District of Delaware. The transaction will likely result in payment in full for all secured claims and unsecured claims, and potential recovery for equityholders, as well as the restoration of jobs. The ability of the deal professionals to generate interest from buyers in an efficient and timely process enabled the chapter 7 trustee to maximize the value of the assets for the benefit of the estates. The chapter 7 trustee and his counsel, financial advisor and investment banker created an extraordinary result for all constituents, including Mullen Automotive, Inc., which significantly shortened its production path into the electric vehicle market through the transaction.
The ELMS sale team included the chapter 7 trustee, David W. Carickhoff; counsel to the chapter 7 trustee, Archer & Greiner, P.C. (Alan M. Root, James G. Smith and Henry O. Boenning); financial advisor to the chapter 7 trustee, Giuliano, Miller & Company (Alfred T. Giuliano and Robert L. Edwards); and investment banker to the chapter 7 trustee, SSG Capital Advisors, LLC (J. Scott Victor, Neil Gupta, Matthew J. Arden, Patrick D. Swanick and Samuel P. Charlton).