Fluid Truck files for Chapter 11 bankruptcy and pursues sale after leadership shakeup
Less than two months after Fluid Truck’s board ousted its sibling co-founders from their executive positions, the company has laid off 30% of its staff,
Less than two months after Fluid Truck’s board ousted its sibling co-founders from their executive positions, the company has laid off 30% of its staff, filed for Chapter 11 bankruptcy protection, and found a potential buyer to take on the business, pending court approval, according to bankruptcy filings and information from a former employee.
Fluid Truck, a startup that allows individuals and small business owners to purchase fleets of vans and trucks to be rented out on its platform, has filed for bankruptcy in a Delaware court. The company, which has been referred to as the "Zipcar of commercial vehicles," has been struggling financially and faces several lawsuits, including a class action filed in Colorado.
According to the bankruptcy filing, Fluid Truck has estimated that the number of creditors awaiting payment is at around 5,500. The company owes FVIP members $12 million, and owes vendors $26 million. Additionally, Fluid Truck suffered cash losses of $20.6 million in 2023. The company's financial struggles began under the leadership of its co-founders and former CEO and chief legal counsel, James Eberhard and Jenifer Snyder. Despite raising over $80 million in venture funds and expanding to 400 cities in 32 states across the U.S., Fluid Truck found itself in a deep financial hole due to a combination of macroeconomic factors and mismanaged insurance claims.
The company's deficits accumulated, and bad blood started festering between Eberhard and two minority shareholders on the board. In July, the board voted to remove Eberhard and Snyder from their roles, and Eberhard's replacement, Scott Avila from Paladin Management, began exploring liquidation options in August. However, Fluid Truck received a large, long-awaited payment from a customer, and decided to use that momentum to try to sell the company.
Kingbee Rentals, a van rental agency in West Valley City, Utah, came forward unexpectedly as a potential buyer. However, Kingbee couldn't 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. To address this, Fluid Truck has asked the courts to approve emergency funding in the form of a $7 million debtor-in-possession (DIP) loan from Kingbee and some existing investors.
The court approved the loan on an interim basis on Friday, but with a caveat: if the sale doesn't close by December 31, Fluid Truck will be in default, and the lenders can liquidate the business. "This gives them a hammer to do something if [Fluid] blows past that deadline," said Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group. It's unclear how much Fluid Truck will be able to sell its assets for, but Stein-Sapir says it could be around the $7 million mark. This is bad news for any unsecured lenders, like FVIP members, who will be among those last in line to be paid back.
"For people who are just unsecured here, it's looking pretty grim in terms of recovery," Stein-Sapir said. "Unless they filed a lien or have some kind of security in those funds, they are in some trouble." Fluid Truck did not immediately respond to a request for comment. The company's bankruptcy filing and the uncertainty surrounding its future make it difficult to predict what will happen next. However, one thing is clear: Fluid Truck's financial struggles have left many creditors in a precarious position, and it's unclear how much they will be able to recover.
The bankruptcy filing and the uncertainty surrounding Fluid Truck's future have left many creditors in a state of limbo. The company's creditors, including FVIP members and vendors, are waiting to see what will happen next and how much they will be able to recover. The bankruptcy expert, Adam Stein-Sapir, believes that the company's assets could be sold for around $7 million, but this is a worst-case scenario for unsecured lenders, who will be among the last to be paid back. The future of Fluid Truck is uncertain, and it remains to be seen what will happen to the company and its creditors in the coming months.
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