by Staff Reporter | Feb 24, 2025 | Economy, News
By Staff Reporter |
The Phoenix-based Nikola Corporation filed for bankruptcy this week — Arizona gave millions in incentives and tax credits to the company over the past five years.
Nikola develops electric- and hydrogen-powered vehicles. The company’s bankruptcy comes after years of federal investigations for fraud concerning the company’s innovation and development claims.
In 2019, Nikola received $1.3 million in pre-approved incentives based on projections. That year, projected new jobs were estimated at 400 and the average wage of projected new jobs was estimated at $80,500. The Arizona Commerce Authority (ACA) earned Project of the Year by the Area Development Magazine for bringing on the company.
In 2020, ACA awarded Nikola the highest single pre-approved A-1 incentives grant out of seven awardees for the Arizona Competes Fund Program: $3.5 million. That year, ACA projected Nikola capital investment to be at around $1 billion. Projected new jobs were estimated at over 2,000, with the average wage of projected new jobs at $65,000.
That was the year Nikola had an estimated value of $30 billion.
ACA also gave Nikola a pre-approval for a $7.1 million tax credit. In 2021, ACA then post-approved Nikola for a $6 million tax credit as part of the Qualified Facility Incentive Program. Nikola was one of 19 businesses to receive the award that year.
The company paid $125 million in a settlement to the Securities and Exchange Commission (SEC) that year, though Nikola didn’t claim wrongdoing.
In 2023, ACA pre-approved Nikola for a $3.74 million tax credit as part of the Qualified Facility Incentive Program. Nikola was one of 24 businesses to receive the award that year.
That year, Nikola founder Trevor Milton was convicted of fraud and sentenced to four years in prison for making false and misleading claims to encourage investor demand. Despite resigning from the company in 2020 and the federal investigations into Milton, ACA continued to give millions in financial incentives to Nikola.
The Department of Justice (DOJ) in its announcement of Milton’s sentencing described Nikola’s promise as a mirage:
“Milton made false claims regarding nearly all aspects of Nikola’s business, including: (i) false and misleading statements that the company had early success in creating a ‘fully functioning’ semi-truck prototype known as the ‘Nikola One,’ when MILTON knew the prototype was inoperable; (ii) false and misleading statements that Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as ‘the Badger’ from the ‘ground up’ using Nikola’s parts and technology, when MILTON knew that was not true; (iii) false and misleading statements that Nikola was producing hydrogen and was doing so at a reduced cost, when MILTON knew that in fact no hydrogen was being produced at all by Nikola, at any cost; and (iv) false and misleading claims that reservations made for the future delivery of Nikola’s semi-trucks were binding orders representing billions in revenue, when the vast majority of those orders could be cancelled at any time.”
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by Terri Jo Neff | Sep 5, 2022 | Economy, News
By Terri Jo Neff |
Financial eyes are focused on data recently released by the U.S. Bankruptcy Court for the District of Arizona showing August had the highest number of new filings this year, while also being the first month of 2022 to have more new filings than the same month in 2021.
Bankruptcy filings are considered a lagging indicators of financial stress and economic health, and the number of new filings goes up and down from month to month. However, billions of dollars from various federal stimulus programs have ebbed in 2022, meaning no more Paycheck Protection Program, no CARES stimulus checks to individuals, and the end of the federal foreclosure moratorium.
Some Arizona families and businesses may no longer have a lifeboat, according to commercial debt collection company ABC/Aemga.
“Companies that have struggled throughout the pandemic, but were kept afloat by stimulus money and generous lenders, may face trouble during the rest of 2022 and into 2023 once those funds run out, as the Fed continues to tighten its ultra-loose monetary policy by reducing asset holdings and raising the Fed Funds Rate target, and credit conditions start to tighten,” the company warns.
Sectors such as retail, construction, health care, and certain manufacturers adversely affected by higher raw material and labor costs remain particularly vulnerable, while travel, hospitality, commercial real estate, consumer goods, entertainment, midstream oil and gas, and power and other energy infrastructure also face pressure and uncertainty, according to ABC/Amega.
For the first eight months this year, there were 5,879 new filings statewide, down from 6,765 for the same period in 2021. Slightly more than 12 percent of this year’s new cases were filed pro se, or without legal representation.
If the August pace continues for the rest of 2022 the total filings for the year in Arizona will come close to last year’s total of 9,353. By comparison, there were 12,903 filings in Arizona in 2020 and 16,237 in 2019.
The majority of new cases filed in the state as of Aug. 31 this year were under Chapter 7 (4,803) followed distantly by Chapter 13 (1,029) and Chapter 11 (46). There has also been a lone Chapter 12 filing.
While households and businesses in Maricopa, Pima, and Pinal counties lead in filings of as Aug. 31 at 3,887, 896, 439 respectively, Yavapai and Mohave counties have similar totals at 151 and 146 respectively.
The three border counties of Cochise, Santa Cruz, and Yuma have 80, 42, and 106, respectively. Meanwhile, Apache (4), Coconino (29), Gila (28), Graham (17), Greenlee (3), LaPaz (7), and Navajo (44) represent less than 2.3 percent of all filings in the state as of Aug. 31.
by Terri Jo Neff | Jun 7, 2022 | News
By Terri Jo Neff |
The number of new bankruptcy filings across Arizona as of May 31 is down compared to the same time last year, and the numbers suggest a continuing falloff compared to 2019’s pre-pandemic bankruptcy activity.
That data comes from a report issued last week by the U.S. Bankruptcy Court for the District of Arizona. It shows 3,498 new bankruptcy filings so far this year, down 17.5 percent from the first five months of 2021.
By comparison, there were nearly 6,800 filings for the same period of 2019, with more than 16,200 being recorded by the end of that year. If the current 2022 rate holds to the end of the year, it would mean a nearly 50 percent decrease from 2019’s numbers.
The most prevalent type of bankruptcy filings so far this year are under Chapter 7, which accounts for 2,901 cases. This is followed by 574 Chapter 13 filings, 22 Chapter 11 filings, and a lone Chapter 12 filing.
The U.S. Bankruptcy Court’s Yuma Office serving La Paz, Mohave, and Yuma counties saw the biggest decline, falling nearly 31 percent from 232 filings in the first five months of 2021 to 161 in January to May of this year. Meanwhile, the filing rates for the Court’s Phoenix Office fell 16.2 percent, while the Tucson Office fell 12.4 percent.
The counties of Apache, Coconino, Gila, Maricopa, Navajo, and Yavapai are served by the court’s Phoenix Office, while Cochise, Graham, Greenlee, Pima, Pinal and Santa Cruz fall under the Tucson Office.
Court records also show 413 of the new cases this year were filed Pro Se, meaning the parties initiated the bankruptcy process without an attorney. Although Pro Se filings represent only 12 percent of the new cases, that rate is significantly lower than 2019 when more than 18 percent of all filings were made Pro Se.
The most filings this year have come out of Maricopa County (513) and Pima County (122) with Pinal County (54) in a distant third place. By comparison, Graham County had only one bankruptcy filing reported in 2019, one in 2020, and none in 2021.
However, court records show there have already been six filed so far this year out of Graham County.