February 23, 2024

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Electric scooter rental pioneer Bird files for bankruptcy

Electric scooter rental pioneer Bird files for bankruptcy

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Bird Global, the leading street electric scooter rental company, has filed for Chapter 11 bankruptcy protection in Florida, five years after becoming the fastest startup ever to reach a so-called “unicorn” valuation exceeding $1 billion.

In September, the New York Stock Exchange suspended trading in Baird, which went public via a blank check in 2021, after its market capitalization fell below the $15 million threshold.

“We are making progress toward profitability and aim to accelerate that progress by right-sizing our capital structure through this restructuring,” Baird interim CEO Michael Washinouchi said on Wednesday.

Bankruptcy court filings revealed that Baird had about $3.25 million in cash on hand but needed “immediate access” to $16.8 million to meet its financial obligations through the week ending January 12.

“Since its founding, Bird has faced difficulties in generating positive cash flow despite its growth efforts and relative market share compared to its competitors,” the company said in a statement on Wednesday, noting that Bird had incurred cumulative losses totaling $1.6 billion at the end of September. .

It blamed “challenging capital markets conditions,” loss of market share to competitors with newer scooters, legal expenses and lower revenues in the winter among contributing factors that led to its Chapter 11 filing.

Baird said it would operate as usual during the restructuring process, and that its lenders had entered into a “stalking horse” sale agreement. The company aims to complete the sale within 120 days. Its European and Canadian companies are not part of the bankruptcy filing.

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The company has raised $25 million in “debtor-in-possession” financing from lenders including MidCap Financial, a unit of Apollo Global Management, to cover its reorganization. These loans have priority over other creditors and usually require high interest rates.

It was founded by former Uber and Lyft CEO Travis VanderZanden in Los Angeles in 2017, and has created dozens of copycat companies around the world. But e-scooter rentals have struggled to achieve consistent profitability, amid regulatory restrictions, safety concerns, and high capital and operating costs.

Earlier this year, Parisians voted to ban electric scooter rentals, shutting down what was once the industry’s largest market. Thousands of trottinettes The streets of the French capital were evacuated last September after complaints from residents that they littered the sidewalks and posed a danger to pedestrians and passengers.

Bird’s bankruptcy filings revealed that the company is a defendant in more than 100 lawsuits, most of them related to personal injury claims from people who had accidents while riding its scooters. The company’s business permits in most cities require it to indemnify local authorities against such lawsuits, contributing to “significant litigation expenses each month.”

Winter also brings special challenges for operators of so-called “bottomless” electric scooters and bikes, such as Bird and its larger American counterpart Lime, as well as its remaining European rivals Dot, Tire and Voyage. Customers are less likely to ride bicycles and scooters in cold or wet weather, and operators are losing business as tourism declines in many cities.

Baird said in a filing last month that it had net losses of $73.4 million in the nine months to September 30, and at that date it had unrestricted cash and cash equivalents of $10.2 million. Last year, Bird reported revenue of $244.7 million and a net loss of $358.7 million.

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filings The South Florida Bankruptcy Court showed that Baird valued his assets and liabilities at between $100 million and $500 million. Creditors include dozens of cities across the United States, as well as technology providers such as Amazon Web Services, fleet management software maker Zoba, data analytics company Palantir, and Chinese scooter maker Ninebot.

Berger Singerman is acting as an advisor to Bird and Teneo is its financial advisor.

Bird also listed its European rival Tier, from which it acquired its US subsidiary Spin in September in a $19 million deal, as owning more than 10 per cent of the stock. SoftBank-backed Tier recently laid off about 22 percent of its workforce afterward described As an “incredibly difficult year”, it attempts to make a “sharp pivot” towards profitability.