E-Scooter Rental Company Bird Files for Bankruptcy

Bird has filed for Chapter 11 bankruptcy, Founded in 2017 by Travis VanderZanden, a former executive of Lyft and Uber, Bird became a pioneer in the micromobility space. However, the company’s fortunes took a turn after going public in 2021 through a SPAC merger.

Bird Files for Bankruptcy

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The company introduced dockless micromobility platforms that allowed urban dwellers to access electric scooters for short-term use.

Its model gained traction, and by 2018, the company achieved a unicorn valuation of over $1 billion, becoming the fastest startup ever to reach this milestone.

The success was by the growing interest in sustainable urban mobility solutions and the rising popularity of electric scooters.

In late 2021, the company went public through a Special Purpose Acquisition Company (SPAC) merger, a route for startups to enter the stock market.

The valuation at the time of the IPO was $2.3 billion. However, the stock faced turbulent times, and within a year, its market capitalization plummeted from over $2 billion at the NYSE debut to a mere $70 million.

The New York Stock Exchange (NYSE) issued a warning about low share price, leading to its delisting in September.

CEO Travis VanderZanden stepped down in June, signaling a leadership change within the company. Following this, Bird faced challenges related to redundancies after acquiring its rival Spin for $19 million. Layoffs were announced as part of an effort to streamline operations and cut costs.

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Financial woes plagued Bird, as evidenced by a filing last month revealing net losses of $73.4 million in the nine months leading up to September 30.

Despite its presence in 350 cities worldwide, profitability remained elusive. The micromobility industry also encountered regulatory challenges, with instances like Paris voting to ban rental e-scooters due to safety concerns and cluttered pavements.

Bird opted for Chapter 11 bankruptcy, that allows the company to restructure its financials without disrupting day-to-day operations.

Apollo Global Management’s division, MidCap Financial, along with existing lenders, stepped in to provide $25 million in financing during the bankruptcy proceedings.

The goal is to sell assets, with a stalking horse agreement initiating a bidding process aimed at maximizing the company’s value.

Interim CEO Michael Washinushi expressed optimism about Bird’s transformation. He addressed the commitment to the company’s mission of making cities more livable by reducing car usage, traffic, and carbon emissions through micromobility.

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Importantly, Bird’s Canadian and European operations remain unaffected by the bankruptcy, continuing to operate normally.

Bankruptcy is faced by the micromobility industry. Competitor Micromobility.com was recently delisted from the Nasdaq, and European startup Tier laid off a portion of its workforce.

The goal of Bird’s Chapter 11 bankruptcy is to sell its assets and maximize value for stakeholders. A stalking horse agreement has been initiated, establishing a baseline bid that sets the floor for the company’s value.

This agreement serves as a starting point for a bidding process, allowing external suitors to participate over the next four months. The company aims to complete the sale process within 90 to 120 days.

Washinushi expresses optimism about transformation, addressing progress towards profitability. Despite the financial challenges, the company remains committed to its mission of making cities more livable by leveraging micromobility to reduce car usage, traffic congestion, and carbon emissions.

Competitor Micromobility.com’s recent delisting from the Nasdaq and Tier’s layoffs shows the industry’s struggles.

Regulatory hurdles, safety concerns, and high capital and operating costs have impeded the consistent profitability of e-scooter rentals.

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