Lordstown Motors Corp. announced today it is embarking on a strategic restructuring process. The initiative is intended to augment the value of its assets, notably the Endurance EV pickup truck, along with the intellectual property and human capital that engineered it. In other words, Lordstown has filed for bankruptcy because making electric cars is no easy feat.
The Ohio-based automotive manufacturer filed a lawsuit against Hon Hai Technology Group, commonly known as Foxconn, and some of its associates. The case was submitted in the United States Bankruptcy Court for the District of Delaware. The litigation alleges that Foxconn engaged in fraudulent practices and repeatedly violated its commercial and financial commitments, leading to significant harm to Lordstown’s business and future opportunities. Foxconn is one of Apple’s biggest manufacturing partners.
As a result of the alleged damage inflicted by Foxconn, Lordstown has initiated an extensive marketing and sale procedure for the Endurance truck and associated assets. To expedite this process and offer potential buyers a valuable asset free from legacy issues, the company is restructuring under Chapter 11 of the U.S. Bankruptcy Code.
“Foxconn’s unfulfilled promises have left us with no option but to resort to Chapter 11 to amplify the worth of Lordstown’s assets for our stakeholders. We will aggressively pursue our legal claims against Foxconn,” said Edward Hightower, CEO & President of Lordstown Motors.
The lawsuit against Foxconn centers on a strategic partnership Lordstown formed with the tech giant to combine resources and create a scalable vehicle development platform. The Ohio company accuses Foxconn of acting in bad faith and using their partnership as a weapon to destroy Lordstown’s business.
To safeguard the company’s assets and resolve contingent liabilities efficiently, Lordstown seeks to use the Chapter 11 restructuring process. It aims to market and sell its innovative Endurance vehicle and related assets under section 363 of the U.S. Bankruptcy Code.
Mr. Hightower expressed confidence in the potential of the Endurance vehicle and the ongoing Chapter 11 process, saying, “We are confident that an orderly, swift sale process will maximize value for our stakeholders and enable the talent and technology behind the Endurance to find supportive new ownership.”
Lordstown Motors maintains it will continue to support its customers during the Chapter 11 process and expressed gratitude to its team, customers, suppliers, and business partners for their unwavering belief in the Endurance and the EV evolution.
Imagine being an owner of an Endurance truck–where does the support come from now?
