American technology startup ELMS has declared bankruptcy and liquidation

The company Electric Last Mile Solutions (ELMS), engaged in the development of electric trucks, announced liquidation. As the interim head of the company, Shona McIntyre, noted, the company's management could not offer a more profitable solution that satisfied creditors and shareholders.

According to the CEO, there was not enough time to save the company. Now the firm will liquidate its assets according to the rules provided for in Chapter 7 of the US Bankruptcy Law. The announcement came just three weeks after the firm warned the market about the lack of finances.

Recall that James Taylor and Jason Luo founded the startup. One of them previously worked as the head of the Hummer brand at General Motors, and the other was the CEO of the Chinese branch of Ford. It was planned that the company would create low-tonnage electric vehicles at a plant in Indiana, previously owned by GM Hummer. Spare parts were supposed to be imported from China.

Light trucks could make routes no longer than 200 km.

The cost of electric cars also should not exceed $ 30 thousand. But for the further development of the startup, additional financial resources were needed. Therefore, the company's management began to think about entering the stock market.

The shortest way to do this was the merger of the company with the public company Forum Merger III Corp., which was present on the market (SPAC deal). This happened at the end of 2020. And by the end of June 2021, the company appeared on the stock exchange, having entered the Nasdaq list.

However, the story ended in a scandal. ELMS executives were involved in financial fraud with the company's securities. The accounting firm BDO LLP, which served the organization, developed a scheme for acquiring shares on the eve of the merger with significant discounts. As a result, the startup found itself without an auditor. Top management in February left the chairs of the president and chairman empty.

After that, the U.S. Securities and Exchange Commission (SEC) has already begun its investigation.

The intervention of the regulator brought down the company's shares below $ 1.

The firm was no longer able to meet the requirements that Nasdaq imposes on issuers. In March 2022, every fourth employee was dismissed from the organization. After Shona McIntyre's announcement of plans to liquidate, the company's share price fell from 55 to 23 cents per paper.