Electric car maker Coda files for bankruptcy

Green car startup Coda Holdings Inc filed for Chapter 11 bankruptcy protection on Wednesday after selling just 100 of its all-electric sedans, another example of battery-powered vehicles' failure to break into the mass market.

The filing with U.S. Bankruptcy Court in Delaware will allow the Los Angeles company to exit the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.

Coda raised over $300 million in private funding during its brief history from high profile names like former Treasury Secretary Henry Paulson and Limited Brands Chief Executive Les Wexner. Now, a group of lenders led by Fortress Investment Group LLC will seek to acquire the company for just $25 million through the bankruptcy process.

The company launched its five-passenger electric car in California a year ago, delivering a range of 125 miles on a single charge. The $37,250 vehicle was criticized for its no-frills styling and low crash safety rating, and its short lifespan also included a recall due to faulty airbags.

Consumers have been slow to gravitate toward electric vehicles due to their high cost, and fears about their driving range.

Just three years ago, Coda was one of an emerging crop of California startups including Fisker Automotive and Tesla Motors Inc seeking to build emission-free electric cars to appeal to mass-market consumers.

Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker's lithium-ion battery maker, A123 Systems Inc, filed for bankruptcy late last year.

General Motors and Nissan Motor Co <7201.T> also invested heavily in electric vehicles, but sales have lagged hopes.

Coda raised far less money than the more than $1 billion Fisker attracted from private investors, securing $344 million in equity, according to court documents. The company in 2012 withdrew its request for $334 million in federal loans like the ones Fisker and Tesla received.

Coda's largest investor is Aeris Capital, an investment firm that manages the wealth of SAP founder Klaus Tschira. Aeris, Harbinger Capital, the hedge fund run by Philip Falcone, and Coda founder Miles Rubin each own more than 10 percent of the company's equity, according to court documents.

Coda also attracted several wealthy individuals as investors, including Wexner, Paulson, billionaire asset manager-turned environmental activist Tom Steyer, Mack McLarty, who for a time was President Bill Clinton's chief of staff, and former Commerce Secretary and Edison International Chief Executive John Bryson.

None of Coda's investors were immediately available for comment.

Fortress, Aeris, Rubin and other investors have extended $5 million in debtor-in-possession financing to keep the company going. The same investors are involved in the bid for Coda.

Paulson, who was chairman and CEO of Goldman Sachs before becoming Treasury secretary, was reportedly brought into the company by former Goldman colleagues Kevin Czinger and Steve "Mac" Heller. Czinger was Coda's first CEO before his resignation in 2010 and Heller is Coda's executive chairman.

Coda was founded in 2009 by Rubin, an attorney who in 2004 had started selling Chinese-made low-speed electric vehicles in the United States. The company hired Phil Murtaugh, a former General Motors China and Chrysler executive, as its CEO in 2011.

As the allure of electric vehicles faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the U.S. Securities and Exchange Commission.

Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.

(Reporting by Nichola Groom in Los Angeles; Additional reporting by Tom Hals in Wilmington; Editing by Daniel Magnowski and Tim Dobbyn)