By Michael Elkin
Michigan-based electric vehicle startup, Electric Last Mile Solutions Inc (NASDAQ:ELMS) announced on Sunday that the company is planning to file for Chapter 7 bankruptcy, after a review of its products and commercialization plans. The announcement comes less than one year after the EV company went public via merger with SPAC Forum Merger III Corporation at an approximately $1.4 billion valuation.
"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 Board Chair. "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 announcement follows a probe by the U.S. Securities and Exchange Commission into prior filings including disagreements with an accounting firm and compliance with the Nasdaq's listing rules. ELMS shares fell more than 45% following disclosure of the probe in March.
In February, the then-Chief Executive Officer Jim Taylor and Chairman and founder Jason Luo resigned, following an investigation into their share purchases. The Company appointed Board member Shauna McIntyre as interim CEO and President.
“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,” ELMS said in a statement on Sunday.
"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."