By Nichola Groom
May 1 U.S. green car startup Coda Holdings Inc
filed for Chapter 11 bankruptcy protection on Wednesday after
selling just 100 of its all-electric sedans, another example of
battery-powered vehicles' failure to break into the mass market.
The filing with U.S. Bankruptcy Court in Delaware will allow
the Los Angeles company to exit the auto sector and refocus on
energy storage, a far less capital-intensive business. The
company uses the same technology it used in cars to build
systems for utilities and building operators to store power.
Coda raised over $300 million in private funding during its
brief history from high profile names like former Treasury
Secretary Henry Paulson and Limited Brands Chief
Executive Les Wexner. Now, a group of lenders led by Fortress
Investment Group LLC will seek to acquire the company
for just $25 million through the bankruptcy process.
The company launched its five-passenger electric car in
California a year ago, delivering a range of 125 miles (201 km)
on a single charge. The $37,250 vehicle was criticized for its
no-frills styling and low crash safety rating, and its short
lifespan also included a recall due to faulty airbags.
Consumers have been slow to gravitate toward electric
vehicles due to their high cost, and fears about their driving
Just three years ago, Coda was one of an emerging crop of
California startups including Fisker Automotive and Tesla Motors
Inc seeking to build emission-free electric cars to
appeal to mass-market consumers.
Tesla has put thousands of cars on the road, but Fisker is
considering a bankruptcy filing. Fisker's lithium-ion battery
maker, A123 Systems Inc, filed for bankruptcy late last year.
General Motors and Nissan Motor Co also
invested heavily in electric vehicles, but sales have lagged
Coda raised far less money than the more than $1 billion
Fisker attracted from private investors, securing $344 million
in equity, according to court documents. The company in 2012
withdrew its request for $334 million in federal loans like the
ones Fisker and Tesla received.
Coda's largest investor is Aeris Capital, an investment firm
that manages the wealth of SAP founder Klaus Tschira.
Aeris, Harbinger Capital, the hedge fund run by Philip Falcone,
and Coda founder Miles Rubin each own more than 10 percent of
the company's equity, according to court documents.
Coda also attracted several wealthy individuals as
investors, including Wexner, Paulson, billionaire asset
manager-turned environmental activist Tom Steyer, Mack McLarty,
who for a time was President Bill Clinton's chief of staff, and
former Commerce Secretary and Edison International Chief
Executive John Bryson.
None of Coda's investors were immediately available for
Fortress, Aeris, Rubin and other investors have extended $5
million in debtor-in-possession financing to keep the company
going. The same investors are involved in the bid for Coda.
Paulson, who was chairman and CEO of Goldman Sachs
before becoming Treasury secretary, was reportedly brought into
the company by former Goldman colleagues Kevin Czinger and Steve
"Mac" Heller. Czinger was Coda's first CEO before his
resignation in 2010 and Heller is Coda's executive chairman.
Coda was founded in 2009 by Rubin, an attorney who in 2004
had started selling Chinese-made low-speed electric vehicles in
the United States. The company hired Phil Murtaugh, a former
General Motors China and Chrysler executive, as its CEO in 2011.
As the allure of electric vehicles faded, Coda struggled to
secure new private funding. Last year, Coda sought to raise $150
million but clinched just $22 million, according to a filing
with the U.S. Securities and Exchange Commission.
Coda has about 40 active employees and expects to recall 50
furloughed workers. Emerald Capital Advisors is advising Coda on
its restructuring, and Houlihan Lokey is its investment banker.