Michigan-based electric vehicle startup Electric Last Mile Solutions Inc ELMS said on Sunday it plans to file for Chapter 7 bankruptcy.
What Happened: The late Sunday disclosure follows a series of developments at the startup, including the resignation of its CEO Jim Taylor and Chairman and founder Jason Luo, linked to share purchases and subsequent regulatory investigation.
“Based on the findings of the same Board-initiated investigation that led to the resignations of Mr Taylor and Mr Luo, ELMS was forced to withdraw financial guidance and declare the Company's past financial statements unreliable,” the startup said.
“The compound effect of these events, along with a pending SEC investigation initiated this year, made it extremely challenging to secure a new auditor and attract additional funding. “
ELMS in March withdrew its previous guidance and said it would need to raise cash to bring its vehicles to market after learning of the investigation by the SEC on March 7.
The startup, which went public in June last year, had previously said it has sufficient cash to run operations between July and September 2022.
Why It Matters: ELMS is among a host of electric vehicle startups that have taken the SPAC route to go public in the recent past and then have been rocked by troubles with either product development, production issues, regulatory investigations, or scandals, or executive churn.
Some of the high-profile names include Nikola Corp NKLA, Lordstown Motors Corp RIDE, and Lucid Group Inc LCID are a few companies that have revealed regulatory inquiries.
Price Action: ELMS closed 1.3% lower at $0.51 on Friday, according to data from Benzinga Pro.
Photo courtesy: Electric Last Mile
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