Lordstown Motors ex-CEO approved to buy company assets for $10 mln

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18/10/2023 19:34

By Dietrich Knauth
       NEW YORK, Oct 18 (Reuters) - Electric vehicle company
Lordstown Motors received U.S. bankruptcy court approval
Wednesday to sell its manufacturing assets to a new company
affiliated with its founder and former CEO Stephen Burns for
$10.2 million.
    LAS Capital, majority-owned by Burns, will acquire
Lordstown's intellectual property, business records, and
machinery including assembly lines for electric vehicle motors
and batteries. 
    U.S. Bankruptcy Judge Mary Walrath approved the sale at a
court hearing in Wilmington, Delaware, saying it was the best
available offer. 
    The sale does not include any rights to pursue legal claims
against Lordstown's directors, officers or equity owners, which
will remain with the bankrupt company, Lordstown Motors'
attorney David Turetsky said at the court hearing. Several
investor groups have already brought claims against Lordstown
and its directors, alleging that the electric truck startup
misled consumers and investors about its ability to ramp up
electric vehicle production.
    Lordstown Motors filed for bankruptcy in Delaware in June,
seeking to wind down its business after failing to resolve a
dispute over a promised investment from Taiwan's Foxconn, which
had agreed to collaborate on the development of Lordstown's
electric pickup truck after its purchase of Lordstown's
manufacturing center.  
    Foxconn, formally called Hon Hai Precision Industry
(2317.TW) and best known for assembling Apple's iPhones, has
argued that it was not required to make further investments in
Lordstown after the automaker's stock fell below $1 per share.
    LAS Capital's attorney Jennifer Madden said that it was not
purchasing any Endurance trucks for resale to the public and not
acquiring any vehicles that had already been sold to customers
and are subject to recalls from the U.S. Department of
Transportation. 
    Most of the purchased equipment is located at an Ohio
manufacturing facility now owned by Foxconn, and Madden said LAS
Capital will work with Foxconn to remove the machinery. 
    Burns resigned from the role of CEO in 2021, following an
internal investigation into a short seller's claim that
Lordstown had overstated the viability of its technology and
misled investors about production plans. Burns later sold his
remaining equity in the company before it went bankrupt.
    Lordstown's ex-CFO Julio Rodriguez, who resigned at the same
time as Burns, is also involved with LAS Capital as a minority
owner and manager.

 (Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and
David Evans)
 ((Dietrich.Knauth@thomsonreuters.com;))