Fluid Truck, whose vehicle rental app made it a darling among Denver startups before post-pandemic overexpansion put it on a path to insolvency, will be sold.
This week’s sale to Kingbee Rentals, a similar company in the Salt Lake City suburbs, allows Kingbee to acquire Fluid’s technology and its 100-plus employees. Kingbee is spending about $10 million on the acquisition and was the only bidder. Its closing date is Friday.
“Fluid Truck is excited for the road ahead with Kingbee,” spokeswoman Liz Gonzalez said Tuesday. “This partnership ensures business continuity and maximizes outcomes for all stakeholders — while also unlocking new opportunities to deliver even greater value to our customers and build on the platform we’re so proud of.”
The deal, which has been in the works for four months, was approved by a bankruptcy judge informally last Friday and formally on Tuesday, after Fluid came to a settlement with jilted vehicle owners, some of whom have accused it of backfilling its yawning budget holes by stealing millions of dollars from sale proceeds and insurance claims belonging to them.
“There is the prospect here of saving jobs and I want to really thank the parties for their good work that caused that to occur,” Judge Craig Goldblatt said at a Friday hearing. “That doesn’t mean it’s a perfect outcome, but I’m satisfied it’s the best outcome that was there.”
“Not every resolution is pretty, and this one isn’t,” the judge went on to say of the sale. “But we also need to be pragmatic and ask ourselves, ‘Well, pretty compared to what?’”
The settlement calls for Fluid to pay vehicle owners $1.2 million in sale proceeds and $1.8 million from insurance claims. Those owners, known as FVIPs in Fluid parlance, had objected to the sale when it appeared their money would be included in Kingbee’s purchase.
“It is not a secret that there are many things still to be desired in this case,” Josef Mintz, a lawyer for vehicle owners and some other creditors, said Friday. “This is not a perfect resolution of each of the creditors’ concerns, but the (creditors) are resolved to support this sale.”
Their settlement also requires Kingbee to help FVIPs find and retrieve their vehicles, alleviating another worry of the owners. Scott Avila, the interim CEO of Fluid, testified Friday that the owners of 82 percent of Fluid’s vehicles now plan to lease them through Kingbee.
“If you look back and see what the options are here, there’s not a lot of options,” Avila said of the 4,800 vehicles leased through Fluid. A selloff would flood the used-vehicle market, shrinking their value, and leaving them stranded across the country is wasteful. “There were very few options when I got here in the middle of July. Those options haven’t gone up.”
When asked if the sale is the best available outcome, he said, “Unequivocally, yes.”
“The sale will potentially preserve jobs for up to 113 of the (company)’s employees when they transition into employment with the buyer,” according to Avila’s testimony.
Fluid Truck was founded in Denver in 2016 as Fluid Market, an Uber-for-everything app that allowed users to rent a vast assortment of household items and vehicles. By 2018, it had become Fluid Truck and focused exclusively on vehicle rentals. It raised at least $80 million from investors.
Fluid benefited from the pandemic, Avila has explained, as home deliveries increased dramatically. Bolstered by those pandemic-era gains, Fluid then “commenced an aggressive growth plan in an effort to become the largest and premier provider in the truck-sharing space,” he said in October. It expanded rapidly to other markets and raised vehicle counts.
Weaker-than-expected demand and an inability to control expenses then harmed the company in the spring. It lost out on a $15 million funding commitment, leaving it with a severe liquidity shortage by August, according to Avila. That is when Kingbee expressed interest.
Fluid filed for Chapter 11 bankruptcy in October. It lost $1.3 million that month, according to reports filed Monday, after dropping $18.7 million in 2022 and $20.6 million in 2023.
Story via BusinessDen
Get more business news by signing up for our Economy Now newsletter.