Wilmington, Del. — A Delaware bankruptcy judge has cleared the path for Canoo’s CEO, Anthony Aquila, to acquire the bulk of the electric vehicle startup’s assets. The company, which has declared bankruptcy and is among a number of industry startups struggling to maintain viability, will see its remaining assets purchased for approximately $4 million in cash.
Judge Brendan Shannon, after reviewing several moderate objections to the sale, stated that the sales process was just and that Aquila was the sole bidder. This transaction will allow Aquila to continue operations and serve existing clients like NASA and the Department of Defense, which had previously acquired vehicles from Canoo.
The trend of electric vehicle industry bankruptcies isn’t isolated to Canoo; others like Fisker, Lordstown Motors, and Nikola have similarly found themselves filing for bankruptcy. Such sales, where company leaders look to salvage assets, are not unprecedented within the industry. For instance, the founder of Lordstown Motors reclaimed a majority of his company’s assets during its own bankruptcy proceedings. Similarly, Trevor Milton, Nikola’s founder, who was recently pardoned, is attempting to buy back his company’s assets.
While Aquila is set to acquire Canoo’s assets, attorney Mark Felger revealed that as many as eight other interested parties evaluated the sale inventory after signing non-disclosure agreements. However, only a few approached making a bid, one of which raised potential red flags with the Committee on Foreign Investment in the United States due to concerns about foreign ownership.
Amidst these proceedings, an electric truck startup called Harbinger, which spun off from Canoo in 2021, emerged as one of the more vocal dissenters to the sale. Harbinger’s legal stance partly arises from a bitterness rooted in Canoo’s allegations against Harbinger’s founders. Canoo had previously sued Harbinger, accusing it of misappropriating trade secrets – a legal battle that continues to unfold.
The accusation of stolen trade secrets plays a pivotal role in the disposition of Canoo’s assets. The bankruptcy trustee has opined that a legal victory for Canoo could potentially bring significant financial benefits and a restriction against Harbinger’s use of the disputed secrets. However, during court proceedings, Harbinger’s attorney John Morris highlighted that, despite ongoing litigation, the specific nature of the trade secrets had never been publicly or confidentially disclosed. This ambiguity, according to Morris, hampered the ability to appropriately appraise Canoo’s value, thus keeping potential bidders in the dark.
Morris further critiqued the sale arrangement. He contested that assigning Aquila the right to conclude any settlement related to the ongoing lawsuit marked a conflict of interest. Despite these concerns, Judge Shannon upheld that the sale negotiations were thorough, involving multiple offers and counteroffers over weeks, affirming that due diligence was exercised and the transaction was made in good faith.
Aside from concerns over lawsuits and asset valuation, there were objections from entities claiming outstanding balances with or holding onto Canoo’s equipment. Felger assured the court that resolutions to these issues were forthcoming.
This disclosure encapsulates a significant juncture for Canoo and could set precedents for asset sales and recovery strategies amidst the tumultuous terrain of the electric vehicle market.
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