Tuesday October 15th, 12:33 PM – We just received the official press release from Energica Motor Company about its Board of Directors meeting decision concerning the bankruptcy judicial liquidation.

Guy Salens – THE PACK: “This is again a very, very sad day for the European electric motorbike industry. I am speechless and I still have to process the news, this is absolutely not a good sign for the electric 2-wheeler mobility. What happened? I am publishing the full press release from Energica here.

Official press release

Energica Motor Company SpA, a manufacturer of high-performance electric motorcycles 75% controlled by the American fund Ideanomics Inc., announces that its Board of Directors meeting held on 14 October 2024 at 3:00 p.m. resolved to enter into a bankruptcy judicial liquidation pursuant to art. 121 et seq. of the insolvency law.

Officially founded in 2014 as Energica Motor Company Srl, and with a design phase that began in 2009, the company has established itself over 15 years as a benchmark for high-performance electric mobility, demonstrating resilience and innovation.

Thanks to its technical know-how, considered the company’s main asset, Energica has introduced four technological platforms to the market and has served as the Unique Manufacturer of the fourth MotoGP electric category, the FIM Enel MotoE World Cup, for four consecutive years. Despite the challenges posed by the global pandemic, Energica achieved record sales volumes and revenues with the launch of the Experia model.

Energica’s entrepreneurial vision has been supported and financed from the outset by its founding partners, who in 2016 decided to list the company in the AIM Italia sector (now Euronext Growth Milan), dedicated to innovative Italian SMEs, to secure the necessary capital for growth that they could no longer sustain alone. The company was listed with a capitalization of €37.3 million.

In 2021, with the investment from Ideanomics Inc., Energica launched the Experia model, achieving record sales volumes and revenues of €13 million, a 200% increase compared to 2021.

In March 2022, Ideanomics successfully completed a voluntary takeover bid, which allowed the shareholders to transform the company into a private entity, making it more free and flexible in managing financing and agile in its growth.

However, the subsequent crisis in the electric market and the decline in sector investments impacted Ideanomics, and consequently, compromised Energica’s investment capabilities.
The company has also faced challenges from the downturn in the automotive market and supply chain, being particularly affected as a small and medium-sized enterprise. The commitment to its objectives and mission has remained steadfast, as demonstrated by initiatives like the solidarity contract aimed at safeguarding workers and overcoming the difficult period.

Despite the efforts from the management in actively and extensively pursuing a search for new investors – always with the aim of preserving going concern in the best interest of creditors – it has become clear in the last few hours that these alternative options are no more viable, thus leaving the company with no other choice than resolving for the opening of a bankruptcy judicial liquidation, thus allowing repayment of creditors to the extent possible from the proceeds of liquidation and according to pari passu rule and priority rankings.

Throughout its history, the company has consistently invested in its workforce, training staff in the most innovative skills in the electric mobility sector, without making any contract terminations in its 15 years of activity. The founding members have prioritized young talent, collaborating closely with schools and universities across the country and beyond. The average age of Energica employees has always ranged from 28 to 35 years.

Management has guaranteed salaries even during the most challenging periods, where necessary also thanks to the support of the Italian minority shareholders, always with a view to preserving business continuity and in the best interest of creditors and all stakeholders. In the last two years, some employees have voluntarily left the company; these professionals have since been absorbed by major players in the Motor Valley.

This press release is attributed to the founding members of Energica. It is noted that Ideanomics has chosen not to comment.

Editor’s note of THE PACK

In light of this unfortunate news, this press release from the U.S. Securities and Exchange Commission (SEC) in August of this year sheds some light on the situation. During the year 2017, executives at Ideanomics were charged with participating in significant fraud and self-serving actions that would ultimately result in disaster for their investors, employees, clients, and business partners.

SEC charges Ideanomics and three senior executives with accounting and disclosure fraud

Washington D.C., Aug. 9, 2024 — The Securities and Exchange Commission today announced settled fraud charges against Ideanomics, Inc., formerly known as Seven Stars Cloud Group, Inc., and its former Chairman and CEO, Zheng (Bruno) Wu, for misleading the public about the company’s financial performance between 2017 and 2019. The SEC also announced settled charges against Ideanomics’ current CEO, Alfred Poor, and former CFO, Federico Tovar, for their roles in the scheme.

The SEC’s orders allege that, in mid-November 2017, Ideanomics and Wu reported 2017 revenue guidance of $300 million, despite numerous known issues indicating that the company would miss this guidance by a wide margin. The company later reported only $144 million in 2017 revenues. Ideanomics and Wu also misled the company’s auditor with a fraudulent letter of intent from a purportedly interested buyer of certain assets to avoid writing down those assets by $17 million in 2017, and Wu improperly hid his personal interest in two companies that received millions in cash and stock from deals with Ideanomics between 2017 and 2019, according to the orders. The SEC further alleged that Ideanomics, Wu, Poor, and Tovar improperly accounted for a deal involving crypto assets in 2019, resulting in the company’s overstatement of revenues by more than $40 million, and made false representations in company financial statements.

“As we alleged, Ideanomics and its executives defrauded investors, including by misstating its financial statements and failing to disclose material information to investors,” said Stacy Bogert, Associate Director of the Division of Enforcement. “The investing public must be able to trust the accuracy of a company’s disclosures, and we will hold accountable executives who abuse that trust by engaging in fraud.”

The SEC’s order against Wu finds that he violated the antifraud, reporting, internal control, and books and records provisions of the federal securities laws and caused certain of the company’s violations. The SEC’s order against Ideanomics, Poor, and Tovar finds that Ideanomics violated the antifraud, reporting, internal control, and books and records provisions of the federal securities laws, and it finds that Poor and Tovar violated the antifraud, reporting, and books and records provisions and caused certain of the company’s violations.

Without admitting or denying the SEC’s findings, all respondents settled the matter by agreeing to cease and desist from future violations of the charged provisions. Wu agreed to pay more than $3.3 million in disgorgement and prejudgment interest and a $200,000 penalty. Tovar and Poor each agreed to pay a $75,000 penalty. Ideanomics agreed to pay a $1.4 million penalty and to retain an independent compliance consultant to review, assess, and make recommendations as to the company’s internal accounting controls. Finally, Wu agreed to a ten-year officer and director bar, and Tovar agreed to be suspended from appearing and practicing before the SEC as an accountant for at least two years.

The SEC’s investigation was conducted by Jason Litow and Brian Palechek and supervised by Pei Chung, Peter Rosario, and Ms. Bogert, with assistance by James Connor, James Carlson, Duane Thompson, Kristen Warden, and David Mendel. The SEC appreciates the assistance of the Monetary Authority of Singapore, the British Columbia Securities Commission, the Hong Kong Securities and Futures Commission, and the China Securities Regulatory Commission.