Commercial EV Manufacturer Electric Last Mile Solutions Will File For Bankruptcy

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Commercial electric last mile solutions said on Monday that it would file for bankruptcy This is the first company in a series of troubled electric vehicle manufacturer spac to go bankrupt. According to the documents submitted to the U.S. Securities and Exchange Commission (SEC), electric last mile solutions was listed in june2021 through a $1.4 billion merger with forum Mercer III, and it is planned to be liquidated through Chapter VII bankruptcy procedures.

The company has been developing a commercial electric vehicle called urban delivery and has been under investigation by the SEC since March.

Shauna McIntyre, interim CEO and President of the company, said in a statement: "unfortunately, there are too many obstacles for us to overcome in a short time."

Three weeks before the announcement of bankruptcy, the company warned that it was in danger of running out of cash, and this was issued less than a year after it listed on NASDAQ through a merger with a special purpose acquisition company rather than the more stringent approach required by the traditional IPO.

Allowing pre revenue start-ups to take the shortcut of IPO before selling a car has caused a lot of trouble. In addition to electric last mile solutions, in the past few years, other electric vehicle manufacturers listed through merger with spac -- including Faraday future, Lordstown motors, lucid motors, Nikola and canoo -- have also faced investigations from the SEC, delisting of NASDAQ, resignation of senior executives, and other delays and roadblocks in the process of bringing their vehicles to the market.

The SEC is currently reviewing the guidelines so that spac can be compared with companies pursuing traditional IPOs. It is expected that the new guidelines will be determined in the second half of 2022. Meanwhile, some participants in the market, including Goldman Sachs, Credit Suisse and Citigroup, have also suspended or restricted trading. According to spac research, some of the 600 or so spacs looking for acquisition companies have been halted or cancelled.

In all respects, this has been a difficult year for electric last mile solutions.

The two top leaders of the company, President and CEO James Taylor and chairman Jason Luo, resigned in February because an internal investigation found that they had purchased the company's equity at a huge discount before the merger. Shortly thereafter, the SEC announced an investigation into electric last mile solutions. This caused the company's share price to plummet below $1.

In May, electric last mile solutions said that it also faced the risk of delisting due to the delay in submitting its annual report for 2021 and its financial report for the first quarter of 2022. The company blamed the delay on its former accounting firm BDO, which accused BDO of helping Taylor and Luo design a plan to buy discounted shares before the merger. Electric last mile solutions has not had an auditor since its public roast, and this gap period is longer than that of any other listed company.

Brian Krzanich, chairman of the board of directors of the company and former Intel CEO, said: "it is very frustrating that we must adopt this approach, but this is the only responsible next step for our shareholders, partners, creditors and employees."

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