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Experimental car company faces hearings as it mulls bankruptcy

As the cost of oil and other natural resources continues to rise, there has been a growing effort to look for alternative forms of energy and transportation. As such, the federal government has been offering assistance to startup companies looking to be part of the solution. One of those businesses, electric-hybrid car manufacturer Fisker Automotive has run into financial trouble and is considering bankruptcy, a development that may interest many in Detroit's business community.

In 2010, the federal Department of Energy approved a $529 million loan to help the company develop its product. After a portion of the loan was distributed to the company, financial troubles began to set in as the company failed to maintain enough capital to continue research and ramp-up production.

Currently, the struggling business is seeking out new investors in the immediate wake of a large-scale layoff. An official for the company indicated that business bankruptcy may become an option if they cannot secure an adequate financing.

To complicate matters, Congress launched hearings to investigate what happened to the company. Some observers worry that this move was unnecessary and could scare away potential investors that would allow the company to move forward.

If efforts to find capital and other debt relief measures are unsuccessful, bankruptcy may be an option. Although it's unclear what type of bankruptcy the company would file, they would be able to pay back creditors and lift the burden of debt. If the company is eligible for Chapter 11 bankruptcy, they could shed debt and remain in business.

Whatever happens in this case, the financial troubles at Fisker show the difficulty of trying to develop an innovative product in a recovering economy. The hope is that the company will find a way out of debt and help lead the auto and energy industries toward sustainable solutions.

Source: The Detroit News, "Exec: Fisker may file for bankruptcy," David Shepardson, April 25, 2013

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