NEW YORK (The Deal) -- Fisker Automotive Holdings has won court approval to enter into two stalking-horse agreements as the electric vehicle maker moves to sell substantially all of its assets at a February auction.

Chief Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Thursday entered an order approving bidding procedures in connection with the sale of the debtor's assets.

According to the order, the Anaheim, Calif., debtor has declared the more than $35.25 million offer of Wanxiang America and the more than $55 million offer of Hybrid Tech Holdings LLC, both stalking-horse bids. The parties had jousted to lead bidding for Fisker, with the debtor proposing a private sale to Hybrid and the official committee of unsecured creditors putting Wanxiang forward as a lead bidder in an auction process.

Gross on Jan. 13 ruled Fisker would hold an auction, with Hybrid's ability to credit-bid capped at $25 million.

Under the approved bidding procedures, rival offers are due by Feb. 7 with a $5 million deposit. Bids must top at least one of the stalking-horse offers by at least $1.6 million, which consists of a $750,000 expense reimbursement for each stalking horse and a $100,000 initial bid increment.

Bids at a Feb. 12 auction must increase in increments of at least $100,000.

Gross is scheduled to consider the sale on Feb. 14.

Hybrid's offer includes the $25 million credit bid, $30 million in cash, the assumption of certain liabilities, $1.85 million in contributions and the modification of its debtor-in-possession financing to remove a lien on certain causes of action on the effective date of a Chapter 11 plan. Hybrid had said it would give unsecured creditors at least $5.5 million of the purchase price if the official creditors' committee supported Hybrid's bid to be stalking horse before the debtor made its decision on a lead bidder.

Wanxiang's offer includes $35.25 million in cash, the assumption of certain liabilities, 20% of the stock in the reorganized debtor and enough cash to pay off Hybrid's DIP loan up to a $9.14 million cap.

Hybrid on Nov. 22 spent $25 million to acquire at auction the U.S. Department of Energy's $168 million interest in a Fisker loan. Fisker filed for Chapter 11 the same day, toting a $79.73 million offer for its assets from Hybrid, which included a $75 million credit bid, the waiver of $4 million of the debtor's liability under a postpetition credit facility from Hybrid and $725,000 in cash payments in connection with a liquidation plan.

The committee on Dec. 30 then proposed a rival sale process and replacement DIP financing from Wanxiang, which on Jan. 29, 2013, acquired substantially all assets of A123 Systems Inc., the bankrupt maker of lithium-ion batteries for Fisker vehicles, in a $256.6 million deal.

The committee asserted its sale process would allow for higher offers than the Hybrid bid.

Fisker objected to the committee's motions, asserting the Bankruptcy Code did not allow the committee to compel a sale without the debtor's approval. It also noted it had obtained additional concessions from prospective buyer Hybrid.

Gross, however, struck down the private sale effort, and the parties subsequently began negotiating orders resolving the debtor's motion for final approval of its postpetition loan from Hybrid, its request for confirmation of its liquidation plan and the motion from the official committee of unsecured creditors for a rival sale process and replacement DIP financing.

TheStreet Recommends

A final DIP order had not been entered as of Thursday, but Wanxiang's latest offer hints Hybrid will continue to be the debtor's postpetition lender. It originally provided an $8.14 million DIP.

Hybrid on Jan. 14 filed a motion for leave to appeal to district court Gross' decision to limit Hybrid's credit bid to $25 million. Parties had until Thursday to respond to the motion. It was unclear from court documents if any parties had responded.

An assistant to Hybrid counsel Peter Benvenutti of Keller & Benvenutti LLP declined comment.

According to a Jan. 13 statement, Hybrid could use Fisker's Delaware plant if there were sufficient consumer demand. Hybrid's Jan. 13 asset purchase agreement allows for the facility to be included or excluded from the sale and outlines the split of sale proceeds between Hybrid and Fisker if the buyer included the plant in the purchase and subsequently sold it within two years. Wanxiang's Jan. 16 APA has an identical treatment for the plant.

"Together with our partners, investors, designers and suppliers, Hybrid is working to achieve a rapid relaunch of Fisker. We look forward to the acquisition of the company and a path forward for the Delaware plant. This will once again generate employment, stimulate the economy and allow for the production of the world's finest automobiles," spokeswoman Megan Grant said in the Jan. 13 statement.

According to a Nov. 22 declaration from Fisker chief restructuring officer Marc Beilinson of Beilinson Advisory Group LLC, Fisker filed for Chapter 11 that day after it failed to achieve certain financial covenants and project milestones under a loan agreement with the Department of Energy.

The debtor has not restarted production of its vehicles since a previously scheduled seasonal shutdown began in July 2012.

The debtor retained Evercore Group LLC to help explore strategic alternatives in April 2012 and focus shifted to a sale process in December 2012. No definitive agreement emerged.

Fisker was founded in 2007 with the goal of designing, assembling and manufacturing premium hybrid vehicles. The company's Karma sedans were assembled by Valmet Automotive, and Fisker planned to produce a new sedan, the Atlantic, in the near future.

In court papers, Fisker reported $281.35 million in assets and $467.93 million in liabilities.

Debtor counsel James H.M. Sprayregen, Anup Sathy and Ryan P. Dahl of Kirkland & Ellis LLP and Laura Davis Jones of Pachulski Stang Ziehl & Jones LLP did not immediately return requests for comment.

William R. Baldiga of Brown Rudnick LLP and Mark Minuti of Saul Ewing LLP represent the creditors' committee.

Bojan Guzina and Andrew F. O'Neill of Sidley Austin LLP and Edmon L. Morton of Young Conaway Stargatt & Taylor LLP are counsel to Wanxiang.

Peter Benvenutti of Keller & Benvenutti and Richard A. Barkasy and Fred W. Hoensch of Schnader Harrison Segal & Lewis LLP represent Hybrid.

Baldiga, Minuti, Guzina and Benvenutti did not return requests for comment.