Less than two months after Fluid Truck's board of directors ousted the brother co-founders from executive positions, the company has laid off 30% of its workforce and filed for Chapter 11 bankruptcy protection. and found a potential buyer to take over the business while the court case is pending. It has been approved, according to the bankruptcy filing and information from former employees.
As of today, Fluid has also been approved for a $7 million loan on an interim basis to continue operations through the end of the year and to finance the restructuring and sale process.
The bankruptcy filing in Delaware court includes a class action lawsuit filed Oct. 10 in Colorado alleging the company's mounting losses and failure to pay outstanding payments to members of its Fluid Vehicle Investor Program (FVIP). It comes in the face of multiple lawsuits. The program allows individuals, including employees and small business owners, to purchase fleets of vans and trucks and rent them on the platform under Fluid's management.
Fluid Trucks estimates there are approximately 5,500 creditors waiting for payment. The company owes $12 million to FVIP members and $26 million to vendors. This is on top of Fluid Truck's $20.6 million cash loss in 2023.
James Eberhard and Jenifer Snyder, Fluid Truck's sibling co-founders and former CEO and lead general counsel, respectively, founded the startup in 2016, dubbed the Zipcar of commercial vehicles. Since then, Fluid Truck has managed to raise funding. Although the company raised more than $80 million in venture funding and expanded to 400 cities in 32 states, the company soon found itself in serious trouble under Eberhard's management due to macroeconomic factors and claims mismanagement. I realized I was in a financial hole.
As Fluid's losses piled up, bad relations began to deteriorate between Mr. Eberhard and two minority shareholders on the board, Bison Capital and Inca Investments, according to people familiar with the matter. Mr. Eberhard was unable to raise additional capital to cover the company's losses, and in July the board of directors voted to remove him and Mr. Snyder from their positions.
Mr. Eberhardt's successor, Scott Avila of Paladin Management, began considering liquidation options in August, according to a filing filed in bankruptcy court on Oct. 16.
But then Fluid Truck received a much-needed large payment from a customer and decided to use the momentum to sell the company. That's when Kingbee Rentals, a van rental agency in West Valley City, Utah, came forward as an unexpected potential buyer.
The only problem? Kingbee could not afford to acquire all of Fluid Truck's assets on its own. And Fluid Truck couldn't afford to keep the lights on for much longer. So in its bankruptcy filing, Fluid Trucks asked the court to approve emergency financing in the form of a $7 million debtor-in-possession (DIP) loan from Kingbee and some existing investors, and the court ruled on Friday. It was provisionally approved. .
“The DIP lender basically said, 'We'll lend you this money, but if the sale doesn't close by December 31st, we can default and liquidate the business,'” Adam said. Stein Sapir said. Bankruptcy experts at Pioneer Funding Group told TechCrunch. “It gives them a hammer to do something with. [Fluid] That deadline will pass. ”
It's unclear how much Fluid Truck could sell its assets for, but Stein-Sapir said it could be as much as $7 million. This is bad news for unsecured lenders like FVIP members who will be last in line for repayments.
“It's a pretty tough situation in terms of recovery for people who don't feel safe here,” Stein-Sapir said. “Unless they file a lien or have some kind of collateral on those funds, they’re going to run into some trouble.”
Fluid Trucks did not respond to a request for comment.