Electric and hydrogen truck manufacturer Nikola Corp. has filed for bankruptcy protection in Delaware, citing a massive battery recall and mounting financial losses. The struggling automaker listed roughly $98 million in funded debt and admitted its dire cash shortage left no path forward outside of an asset sale.

Battery Recall Sparks Financial Meltdown

Nikola’s troubles escalated after it voluntarily recalled all battery-powered trucks it had sold, following a series of fires caused by faulty coolant systems. The recall, initiated in the third quarter of 2023, resulted in $44 million in losses and triggered a shareholder class action lawsuit in Arizona federal court. Investors accused Nikola and its executives of misleading the public about the safety of its vehicles.

“With no sufficient cash to fund operations and no viable way to raise those funds, the company’s board concluded that an orderly sale process is the best option to maximize asset value and return for creditors,” CEO Stephen J. Girsky stated in court filings.

Scramble for Buyers as Sale Process Unfolds

Nikola, working alongside investment bankers at Houlihan Lokey, has been actively seeking buyers for its assets. However, attempts to sell the company as a whole have so far failed. Now, the automaker is negotiating with three potential acquirers while simultaneously marketing its vehicle production and energy infrastructure divisions as separate entities.

The first bankruptcy hearing is scheduled for Thursday, Feb. 20, before U.S. Bankruptcy Judge Thomas M. Horan in Wilmington, Delaware.

Legal Counsel and Next Steps

Nikola is represented by Potter Anderson & Corroon LLP attorneys M. Blake Cleary, Brett M. Haywood, Maria Kotsiras, and Shannon A. Forshay, along with Pillsbury Winthrop Shaw Pittman LLP lawyers Joshua D. Morse, Jonathan R. Doolittle, Andrew V. Alfano, Caroline Tart, and Chazz C. Coleman.

The coming weeks will determine whether Nikola can find a buyer or be forced into piecemeal liquidation—potentially marking the final chapter for the once-promising electric truck startup.