Only two months after Fluid Truck's board of directors removed the sibling co-founders from their executive roles, the company has lost 30% of its workforce, filed for Chapter 11 bankruptcy protection, and secured a potential buyer to assume the business as part of the liquidation, at least according to bankruptcy filings and a former employee.

Plus, it has already been approved on an interim basis today for a $7 million loan that will help the business sustain its operations during its restructuring and sale processes throughout the end of the year.

The company is now facing mounting losses and spate of lawsuits, including a class action filed last Thursday in Colorado, for allegedly unpaid money owed to members of Fluid Vehicle Investor Program. FVIP allows individuals, employees, and small business owners to purchase fleets of vans and trucks to be rented out on the platform under Fluid's management.

Fluid Truck estimated that the number of waiting creditors now stands at about 5,500. The company owes members FVIP an amount of $12 million and owes vendors an amount of $26 million. On top of all that, Fluid Truck lost the cash equivalent of $20.6 million in 2023.

James Eberhard, along with his sister and co-founder Jenifer Snyder, founded the company in 2016. Another startup dubbed the "Zipcar of commercial vehicles," Fluid Truck was described by its sibling co-founders as CEO and chief legal counsel before they launched the startup, respectively. The startup went on to raise more than $80 million in venture funds, expanding operations into 400 cities across 32 states in the U.S. The company then went to plunge into a deep financial hole under the tutelage of Eberhard, due to a mix of macroeconomic factors and mismanaged insurance claims. Fluid's losses continued to mount, and ill feeling between Eberhard and two minority shareholders on the board-Bison Capital and Ingka Investments-began to brew, said people familiar with the situation. Eberhard couldn't raise any more capital to cover the losses, and in July, the board ousted him and Snyder from their roles.

Eberhard's successor, Scott Avila of Paladin Management, began scouring its options for liquidation in August, said a declaration he filed with bankruptcy court on October 16.

Then, the momentum actually came from a large, long-awaited payment from a customer. Fluid Truck decided to use that momentum to try to sell the company. That's when a possible buyer mysteriously appeared: Kingbee Rentals, a van rental agency in West Valley City, Utah.

The only catch? Kingbee couldn't shell out the dough to buy all of Fluid Truck's assets outright. And Fluid Truck couldn't keep the lights on much longer. So as part of its Chapter 11 bankruptcy filing, Fluid Truck asked the courts to allow it to take emergency funding in the form of a $7 million debtor-in-possession loan from Kingbee and some existing investors, and the court did so on an interim basis on Friday.

"The DIP lenders basically said, 'We're going to loan you this money, but if the sale does not close by December 31 you are in default, and we can liquidate the business," said Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group. "It gives them a hammer to do something if [Fluid] blows past that deadline."

It's not clear what Fluid Truck will be able to sell its assets for, but Stein-Sapir says it could be roughly that $7 million mark. That's bad news for any unsecured lenders, such as FVIP members, who will be among those last in line to get repaid.

For people who are simply unsecured here, it's looking pretty grim in terms of recovery, Stein-Sapir said. "Unless they filed a lien or have some kind of security in those funds, they are in some trouble.".