Yesterday a petition for bankruptcy was filed by a supplier of test equipment in Gothenburg towards NEVS, ironically as most of us now know, the whole issue was handled by a consultant agency which deals with unpaid bills, the whole thing was a routine issue for them and they were simply following procedure. However in this case the procedure was not exactly what the CEO of Labo had in mind.
NEVS is today visiting the CEO of Labo according to unconfirmed sources to try to clear up the matter or at least inform the supplier about the development regarding the pending deal. Hopes are that these talks will result in a withdrawal of the petition. The CEO of Labo already stated yesterday that he was considering to withdraw the petition since it wasn’t really his wish to make one in the first place.
So what is bankruptcy? Well basically its a state of financial situation where your assets are worth less than the total sum of your debts. Right now, that is not the issue at NEVS. The assets are worth more than the total debt so if the company was to be liquidated, everyone of the suppliers and creditors would be paid. This would however probably not happen at a bankruptcy since as we know, the lawyers will eat up a large portion of the funds. So the situation is pretty simple, the suppliers dont want a bankruptcy, neither does NEVS and we certainly dont and NEVS keeps on trying to free up cash in order to stay afloat.
If the bankruptcy hearing were to take place in the early days of september, an investigation would be conducted into NEVS finances inorder to establish if the company is insolvent. The outcome of such an investigation would most likely conclude that the company is not and the necessary funds would be extracted in means of property. This however is a lengthy process and costly one at that and in nobodies best interest. The amount on the other hand is so small that it would be enough for NEVS to simply sell one single car in order to pay the bill, which is pretty ironic considering that there are now 32 unsold new or used 9-3′s sitting out with dealers. The reason for them being there is that in times like these, nobody wants a car from a company that might go bankrupt, I dont blame people for not buying, neither would I in this situation.
Every monday all employees meet up at NEVS and are given an internal briefing on the situation and what needs to be done during the week to come. Some education of employees is conducted each monday plus minor adjustments and continuous improvements. Such things as keeping the factory in good clean shape is important not only because the grass simply doesn’t stop growing but also for morale, it simply feels good coming home when its nice and clean!
I’ve learned from sources that Dong Feng and Mahindra are still working closely with NEVS and that they’ve done their due diligence, the work right now is mostly about the format of the contracts and to ensure that none of the partners ends up in an unwanted situation later on. Every single detail must be cared for in deals as big as this, and discussing details takes time. I asked Mattias Bergman where they’re at right now and he said that you dont really know how far you’ve come until you’re done looking back at where you were. This to me makes perfect sense since a process like this is not a straight line with a beginning and an end, but rather a process that develops over time. Deadlines and timelines are based on previous experiences, but since nobody has done a deal exactly like this one, its impossible to state exactly how long its going to take, an estimate is of course in place but that estimate is not a firm target but rather a moving target that can be moved either to a later or earlier date.
Mattias point of view on the timeline is confirmed by other industry sources I have who concur with his description of the process, one stated that a deal-process is like a living entity that evolves as it matures and that it has not finished growing once the signature is in place but continues to evolve over time as the partnership stays in place. Other industry experts I’ve talked to (I think you know who) agrees that its extremely important that no detail be overlooked, any misstakes done at this stage or if details are left out which makes one partner unhappy could result in catastrophe later on.