Battery swap pioneer Better Place, Inc., which filed for liquidation on Sunday (earlier post), lost $459 million last year on $6.9 million in sales, as detailed in the startup’s financial statements released by private company research firm PrivCo.
Better Place had raised more than $900 million in investor funding, PrivCo noted. Under the Liquidation Petition filed in Israel on Sunday, Better Place listed assets of $9.5 million, supplier liabilities of $40 million, and cumulative losses of $812 million.
PrivCo CEO and Corporate Lawyer Sam Hamadeh explained that the Israeli insolvency regime is based on the Companies Ordinance (New Version) 5743-1983, the Companies Regulations (Liquidation) 5477–1987, and the Bankruptcy Ordinance of 1980. Because Better Place has little chance for a reorganization under Israeli bankruptcy law (similar to a company Chapter 11 reorganization in the US), the company was placed in Liquidation in the Lod District Court in Israel on Sunday—a process initiated by one of its major shareholders.
Under Israeli corporate bankruptcy law, the State Receiver—who represents the Government—acts as the official custodian of Better Place's assets. The State Receiver will also appoint a temporary liquidator.
Unlike US Bankruptcy Law, under Israeli bankruptcy law there is no automatic seniority for lenders to the distressed company while it attempts to operate in bankruptcy, (known as ‘debtor-in-possession’ financing, which in the US entitles the Creditor to first claims over pre-bankruptcy lenders). As a result, a re-organization similar to a US Chapter 11 process is nearly impossible without all creditors agreeing. So Better Place has no access to capital and will likely be forced to liquidate.—Sam Hamadeh
In March, a KMPG auditor’s report found that Better Place “has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern.”