The company has been developing a commercial electric vehicle called Urban Delivery and has been under investigation by the SEC since March.
Shauna McIntyre, the company’s interim CEO and president, said in a statement: "Unfortunately, there are too many obstacles for us to overcome in a short time."
Three weeks before declaring bankruptcy, the company warned that it was in danger of running out of cash, and it was issued less than a year after it went public on Nasdaq through merger with a special purpose acquisition company instead of taking the stricter route required by traditional IPO.
Allowing pre-income startups to take the IPO shortcut before selling a car has caused many troubles. In addition to Electric Last Mile Solutions, in the past few years, other electric vehicle manufacturers listed through merger with SPAC-including Faraday Future, Lordstown Motors, Lucid Motors, Nikola and Canoo– have also faced investigations from the SEC, delisting of Nasdaq, resignation of executives and other delays and roadblocks in the process of bringing their vehicles to market.
The SEC is currently reviewing the guidelines to make SPAC comparable to companies pursuing traditional IPOs, and it is expected that new guidelines will be finalized in the second half of 2022. At the same time, some participants in the market, including Goldman Sachs, Credit Suisse and Citigroup, have also suspended or restricted trading. According to SPAC Research, some transactions of about 600 SPAC companies currently looking for acquisition companies have stopped or been cancelled.
From all aspects, this year has been a difficult year for Electric Last Mile Solutions.
The two top leaders of this company, President and CEO James Taylor and Chairman Jason Luo, resigned in February, because an internal investigation found that they bought the shares of the company at a huge discount before the merger. Shortly thereafter, the SEC announced an investigation into Electric Last Mile Solutions. This caused the company’s share price to plummet below $1.
In May, Electric Last Mile Solutions said that it was still facing the risk of being delisted due to the delay in submitting the annual report for 2021 and the financial report for the first quarter of 2022. The company blamed the delay on its former accounting firm BDO, which accused BDO of helping Taylor and Luo design a plan to buy discounted shares before the merger. Electric Last Mile Solutions has never had an auditor since it publicly spoke out, and this blank period is longer than any other listed company.
Brian Krzanich, chairman of the board of directors of the company and former Intel CEO, said: "We have to take this approach, which is very frustrating, but it is the only responsible next step for our shareholders, partners, creditors and employees."
(reporting)