Following a challenging year, the electric scooter company, Bird, previously assessed at a value of $2.5 billion by investors, has declared Chapter 11 bankruptcy.
In a press release, Bird confirmed that it had entered into a “financial restructuring process aimed at strengthening its balance sheet,” with the company continuing to operate as normal in pursuit of “long-term, sustainable growth.”
Bird, a startup founded in 2017 by Travis VanderZanden, a former executive of Lyft and Uber, was one of many to bring dockless micromobility platforms to global cities, offering short-term rentals of electric scooters or bikes. However, after going public in late 2021 through a SPAC merger in an over-saturated market with dubious economics, its stock consistently plunged. Its market cap fell from over $2 billion at its New York Stock Exchange (NYSE) introduction, to a mere $70 million a year later. Consequently, the NYSE warned that Bird’s share price was too low due to this significant decline.
The company has entered into a “stalking horse” agreement, which sets a floor for Bird’s value, with its existing lenders, according to a release. Bird said it will use the bankruptcy proceeding to facilitate a sale of its assets, which it expects to complete within the next 90 to 120 days.
Bird’s electric scooters, once hailed as an eco-friendly alternative to cars and public transportation, saw a surge in popularity before the Covid-19 pandemic. The company’s value reached $2.5 billion after raising over $275 million in 2019.
However, once the pandemic enforced lockdowns in 2020, customer usage fell dramatically and Bird faced difficulty regaining its momentum. Even though the company merged with a special purpose acquisition company in 2021 and became public, the share price took a nosedive.
Bird faced bankruptcy after being delisted by the New York Stock Exchange in September due to the failure to meet the exchange’s requirements of maintaining a market capitalization above $15 million for 30 consecutive days.
Bird’s shares then started trading on the over-the-counter exchange later that month. As of Wednesday, the shares were being traded under $1.
It is important to note, Bird Canada and Bird Europe were not included in the company’s Wednesday filing and, according to a press release, will “continue to operate as usual.”
