Less than two months after the board of Fluid Truck removed its sibling co-founders from their executive positions, the company has taken a big hit. They had to let go of 30% of their staff, file for Chapter 11 bankruptcy protection, and are now in the process of finding a buyer to take over the business. This information comes from bankruptcy filings and a former employee familiar with the situation.
To keep the business running and facilitate the restructuring and sale process until the end of the year, Fluid Truck has secured a $7 million loan on an interim basis. They are hoping to get court approval for this.
The bankruptcy filing happened in a Delaware court as the company’s losses continued to grow. Fluid Truck is facing multiple lawsuits, including a class-action suit filed in Colorado on October 10. The lawsuit claims that Fluid Truck failed to pay members of its Fluid Vehicle Investor Program (FVIP), including individuals and small business owners who had purchased fleets of vans and trucks to rent out through Fluid’s platform.
The number of creditors waiting for payment from Fluid Truck is estimated to be around 5,500. The company owes $12 million to FVIP members and $26 million to vendors. On top of that, Fluid Truck suffered cash losses of $20.6 million in 2023.
The startup, founded by James Eberhard and Jenifer Snyder in 2016, has raised over $80 million in venture funds and expanded to 400 cities across 32 states in the U.S. However, mismanagement and financial struggles under Eberhard’s leadership led to this dire situation.
After Eberhard was removed from his role, the new CEO, Scott Avila, explored liquidation options. A potential buyer, Kingbee Rentals, emerged when Fluid Truck received a significant payment from a customer. Kingbee, a van rental agency in Utah, expressed interest in acquiring Fluid Truck, but financial constraints on both sides complicated the deal.
Fluid Truck sought court approval for emergency funding in the form of a $7 million loan from Kingbee and existing investors. The court granted this approval on an interim basis, with a deadline of December 31 for the sale to be finalized. Failure to meet this deadline could result in the liquidation of the business.
The future remains uncertain for Fluid Truck, its creditors, and unsecured lenders like FVIP members. The potential sale of assets for around $7 million might not bode well for those hoping to recover their investments.
As the situation unfolds, stakeholders are eagerly awaiting updates on the sale and the company’s financial stability moving forward. Fluid Truck has yet to provide any official comments on the matter.
