Lordstown Motors files for bankruptcy, sues Foxconn; Will sell Endurance Vehicle
LORDSTOWN, Ohio (WKBN) – Lordstown Motors officially filed for bankruptcy early Tuesday morning after a tumultuous few months in the stock market as their deal with Foxconn fell apart.
First News has gotten access to the official filing for bankruptcy, which was filed in Delaware on Tuesday.
The filing estimates Lordstown EV Corporation has 5,001 to 10,000 creditors and estimates $100,000,001 to $500 million in assets and liabilities.
Lordstown Motors’ CEO Edward Hightower filed the paperwork.
The bankruptcy documents include “first day” motions to continue operations at LMC and uphold their responsibilities to stakeholders, according to a press release from Lordstown Motors.
As part of the litigation, Lordstown filed a lawsuit against the Hon Hai Technology Group and its affiliates, including Foxconn.
We remain confident that an orderly, expedited sale process will maximize value for our stakeholders and enable the talent and technology behind the Endurance to find new and supportive ownership. While in Chapter 11, Lordstown will continue to support our customers. We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners for believing in the Endurance and in the EV evolution. Edward Hightower, Lordstown Motors CEO
The press release also says Lordstown is in the process of trying to sell the Endurance vehicle and related assets.
CEO Hightower also released this statement:
As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential – and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform. Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.
Lordstown Motors announced they planned to sue Foxconn for not fulfilling their part of the agreement earlier this month.
According to the litigation, LMC says Foxconn failed to live up to its commercial and fincancial commitments to Lordstown. This failure led to material damage to the company and its future prospects, according to the release.
Under the original agreement, LMC divested some of its most most valuable assets to Foxconn, including its manufacturing facility, which they say is one of the largest in America.
In the press release, LMC says:
The lawsuit details the fact that Foxconn had no intention of living up to its commitments, particularly with respect to the new vehicle development platform. As the lawsuit describes, Foxconn simply used its variety of contractual arrangements with the company as a tool to maliciously and in bad faith destroy Lordstown’s business—while leveraging resources gained through the partnership to advance its own business interests.
The deal between Lordstown Motors and Foxconn was finalized back in May of 2022. The former GM plant said the transaction was $230 million plus approximately $27 million for operating and expansion costs.
Foxconn had also previously purchased $50 million of LMC stock from the company.
A new deal in November said Foxconn will invest $170 million in LMC stock.
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Upon completion of those investment transactions, Foxconn was expected to hold all of Lordstown Motors’ outstanding preferred stock and 18.3% of its common stock on a pro-forma basis.
According to the Associated Press, Lordstown warned the public in May it was in danger, saying “As a result of these uncertainties, there is substantial doubt regarding our ability to continue as a going concern.”
The stock fell below $1 in March. When the market closed Monday night, the stock stood at $2.76.
In February, LMC stopped production on the Endurance Vehicle and recalled the newer EVs.
Source: WKBN.com
