Fisker's plan to make owners pay for recall repairs is illegal, DOJ says
The U.S. Department of Justice says bankrupt EV startup Fisker's plan to make owners pay for labor costs related to multiple recalls is illegal
The U.S. Department of Justice says bankrupt EV startup Fisker’s plan to make owners pay for labor costs related to multiple recalls is illegal, according to a new filing.
Recall Costs and Labor
The two recalls in question are related to the Ocean SUV. One recall is due to faulty door handles, while the other is related to a faulty water pump that can cause loss of power. Fisker's proposed settlement plan suggests that the company will set aside no more than $750,000 to cover the cost of physical parts required to remedy these recalls.
However, the NHTSA argues that this approach is unacceptable, as it would only cover the cost of parts, not labor costs. The agency notes that the total cost of repairs could be nearly twice as much as the allocated $750,000, which would leave Fisker with insufficient funds to cover labor costs.
NHTSA's Objections
The NHTSA's objections to Fisker's proposed settlement plan are based on several grounds:
The NHTSA argues that this approach is problematic, as it would allow Fisker to shift the burden of labor costs onto its owners, rather than taking responsibility for covering these costs itself.
Impact on Owners
The NHTSA's objections have significant implications for Fisker's owners. Some owners have already paid out of pocket for the labor costs of these recall repairs, and the agency argues that they should not have had to bear this burden.
In response to the NHTSA's objections, the agency notes that it does not object to owners being reimbursed in some way, but rather that the reimbursement scheme proposed by Fisker is unacceptable.
SEC Investigation
The SEC's investigation into Fisker's bankruptcy case is separate from the NHTSA's objections, but the two issues are interconnected. The SEC's investigation is focused on Fisker's handling of the recalls and potential reimbursement scheme for labor costs, among other issues.
Landlord's Filing
The landlord of Fisker's final headquarters has submitted a filing claiming that the company left the building in disarray. This filing has raised concerns about Fisker's financial stability and its ability to pay its debts.
Bankruptcy Proceedings
Fisker's proposed settlement plan could be confirmed by a judge as early as Wednesday during a previously scheduled hearing. However, the NHTSA's objections and the SEC's ongoing investigation have raised significant questions about the company's ability to move forward with its bankruptcy proceedings.
In conclusion, the NHTSA's objections to Fisker's proposed settlement plan are based on several grounds, including the manufacturer's responsibility to cover labor costs, the potential for reimbursement schemes to shift the burden onto owners, and the implications for Fisker's owners who have already paid out of pocket for recall repairs. The SEC's investigation and the landlord's filing have raised additional concerns about Fisker's financial stability and its ability to pay its debts.
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