NEW YORK, June 21 (Reuters) - Electric vehicle startup

Fisker is headed towards a liquidation, attorneys said in U.S.

bankruptcy court on Friday, as two creditor factions previewed a

battle over which group will be paid first.

Fisker filed for bankruptcy protection in Delaware on Monday

after burning through cash in an attempt to ramp up production

of its Ocean SUVs. The company initially said it would seek

additional financing and continue "reduced operations," but

Fisker's attorney Brian Resnick said at the hearing in

Wilmington the company does "not currently anticipate being able

to obtain financing."

Resnick told U.S. Bankruptcy Judge Thomas Horan that the

company planned to liquidate its assets, and it has reached a

tentative deal with a single buyer for all of its 4,300

vehicles.

The California-based company, founded by automotive

designer Henrik Fisker, was never profitable, with about $273

million in revenue in 2023 and a net loss of $940 million.

Fisker owes over $850 million to two groups of bondholders,

and attorneys for the larger group accused a minority faction

led by Heights Capital Management of seizing control of Fisker's

debt in November through a "suspect" transaction with Fisker.

At the time, Fisker was late in providing audited financial

statements due under its debt agreements, and Heights used that

"minor, technical default" to claim all of Fisker's assets as

collateral on its bonds, Alex Lees, an attorney for other

bondholders, said.

"They basically handed the whole business over to Heights,"

Lees told Horan. "Fisker has been liquidating outside of this

court's supervision, basically for one creditor's sole benefit."

Lees said that Fisker should have filed for bankruptcy in

November. His group intends to challenge the November agreement

that put Heights at the front of the line for repayment in

Fisker's bankruptcy, Lees said.

Heights' attorney Scott Greissman said Lees' claim was

"outrageous" and that Heights tried to help Fisker survive.

"There may be a lot of disappointed creditors, but none more

than Heights," Greissman said.

Greissman said the expected sale of Fisker's fleet would pay

only a "fraction" of Heights' $185 million in debt. That would

leave little hope of repayment for other creditors.

Linda Richenderfer, an attorney for the U.S. Department of

Justice's bankruptcy watchdog, said Heights appeared to hold all

the leverage, making it likely that Fisker's bankruptcy would

convert to a straightforward Chapter 7 liquidation once the

vehicle fleet is sold.

Heights "is getting everything it wants," Richenderfer said.

"It has no reason next week to agree to anything more."

Fisker's fate was sealed in March, when it failed to reach a

partnership with a large vehicle manufacturer - which Reuters

has reported to be Nissan ( NSANF ). Before that failed, Fisker paused

production and laid off staff to conserve cash, Resnick said.

The hyper-competitive EV market has seen several companies,

including Proterra, Lordstown and Electric Last Mile Solutions ( ELMSQ ),

file for bankruptcy in the past two years as they grappled with

weakening demand, fundraising hurdles and operational challenges

from global supply chain issues.