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 has also been approved on an interim basis as of today for a $ 7 million loan to keep the business operational and fund the restructuring and sale process through the end of the year.
The bankruptcy filing in a Delaware court comes as the company’s losses mount and it faces several lawsuits, including a class action filed on October 10 in Colorado, after it allegedly failed to pay money owed to members of its Fluid Vehicle Investor Program (FVIP) – a program that allowed individuals, including employees, and small business owners to purchase fleets of vans and trucks to be rented out on the platform under Fluid’s management.
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. That’s on top of the $ 20.6 million in cash losses Fluid Truck suffered in 2023.
James Eberhard and Jenifer Snyder, Fluid Truck’s sibling co-founders and former CEO and chief legal counsel, respectively, founded the startup that has been referred to as the Zipcar of commercial vehicles in 2016. Since then, Fluid Truck has managed to raise more than $ 80 million in venture funds and expand to 400 cities in 32 states across the U.S. But the company soon found itself in a deep financial hole under the stewardship of Eberhard due to a combination of macroeconomic factors and mismanaged insurance claims.
Fluid’s deficits accumulated and bad blood started festering between Eberhard and two minority shareholders on the board – Bison Capital and Ingka Investments – according to people familiar with the matter. Eberhard was unable to raise more capital to fund the company’s losses, and in July, the board voted to remove him and Snyder from their roles.
Eberhard’s replacement, Scott Avila from Paladin Management, began exploring liquidation options in August, according to a declaration he filed in bankruptcy court on October 16.
But then Fluid Truck received a large, long-awaited payment from a customer, and decided to use that momentum to try to sell the company. That’s when Kingbee Rentals, a van rental agency in West Valley City, Utah, came forward unexpectedly as a potential buyer.
The only problem? 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. So in its bankruptcy filing, 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, and the court approved it on an interim basis on Friday.
“The DIP lenders basically said, ‘We’re going to loan you this money, but if the sale doesn’t close by December 31, you’re in default, and we can liquidate the business,” Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group, told TechCrunch. “It gives them a hammer to do something if [Fluid] blows past that deadline.”
It’s unclear how much Fluid Truck will be able to sell its assets for, but Stein-Sapir says it could be around that $ 7 million mark. That’s 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.
