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Authored by Chase Smith via The Epoch Times,

Electric vehicle (EV) manufacturer Fisker Inc. is under investigation by the U.S. Securities and Exchange Commission (SEC) and faces formal objections from the U.S. Department of Justice (DOJ) over its Chapter 11 bankruptcy proceedings. The company filed for bankruptcy earlier this year after halting production in March.

Recent filings in the U.S. Bankruptcy Court for the District of Delaware indicate that these legal challenges could affect Fisker’s restructuring and liquidation plans.

The SEC initiated a probe into Fisker’s activities before its bankruptcy filing in June, focusing on potential violations of federal securities laws, according to court records.

In its filing, the SEC stated that Fisker’s bankruptcy plan must preserve the SEC’s “police and regulatory powers” to hold the company accountable for any past misconduct.

The regulator has also stressed the importance of Fisker preserving all relevant documents and records post-bankruptcy to ensure compliance with ongoing investigations and any potential future actions.

According to the filings, the SEC issued multiple subpoenas seeking information about Fisker’s operations before its financial collapse.

Simultaneously, the DOJ, on behalf of the National Highway Traffic Safety Administration, has raised objections concerning Fisker’s financial provisions for vehicle recall expenses.

The DOJ contends in filings that Fisker’s proposed $750,000 cap on recall expenses in its bankruptcy plan is insufficient to cover both parts and labor costs required for vehicle repairs.

According to the DOJ, this cap violates the National Traffic and Motor Vehicle Safety Act, which mandates that manufacturers remedy vehicle defects “without charge when the vehicle … is presented for remedy.”

The DOJ argues that Fisker’s plan improperly shifts the financial burden to vehicle owners, requiring them to pay upfront for labor costs with only the possibility of future reimbursement, which is another violation of the Safety Act.

Fisker has issued five separate recalls for its vehicles, addressing issues ranging from defective door handles to faulty electric water pumps, according to the filings.

While some recalls were resolved through over-the-air software updates, others necessitated physical repairs that involved significant costs.

The DOJ says that Fisker’s current plan fails to meet its legal obligations to consumers by limiting funds available for recalls and not fully covering the costs associated with necessary repairs.

The bankruptcy case involves Fisker’s assets and a plan to establish a Liquidating Trust to distribute the remaining assets to creditors.

Both the SEC and DOJ are pushing for changes to ensure Fisker’s accountability for legal obligations tied to its pre-bankruptcy conduct and ongoing responsibilities.

The court is scheduled to address these objections during a hearing on Oct. 9.

If the court sides with the SEC and DOJ, Fisker may be required to modify its bankruptcy plan to comply with regulatory demands.

This could include adjustments to its recall funding provisions and assurances that it will retain and produce relevant documents for the SEC’s ongoing investigation.

Fisker did not respond to a request for comment regarding the SEC and DOJ filings.