Lordstown Motors Extends Deadline for Bids to Buy Its Assets

LORDSTOWN, Ohio – It doesn’t bode well for Lordstown Motors Corp. and its creditors that the company quietly extended until 5 p.m. Monday the deadline for bids to purchase its assets.

There was no formal announcement, just a notice posted on the Delaware Bankruptcy Court docket notifying interested parties that the EV startup was invoking its right to “modify such dates” set in the bidding procedures schedule U.S. Judge Mary F. Walrath approved Aug. 8.

In other words, the company apparently is hoping that more bidders come forward with offers higher than the ones already received – assuming any were received.

In previous court filings, Lordstown Motors asserted it had received 13 indications of interest that could culminate in assets sales.

“Four [indications of interest] are for the acquisition of all or substantially all the company’s assets. Four others are for a subset of the debtor’s assets. And five are from liquidators who would like to buy some or all the assets either for an upfront cash fee or for a fee and a shared participation in the proceeds from their sale,” stated a declaration by Jeffrey Finger, managing partner at the Jefferies LLC restructuring firm retained by Lordstown Motors.

Jefferies was first retained by Lordstown Motors in September 2021 “to explore all market alternatives.” That process resulted in the sale of its plant, formerly operated by General Motors, to Foxconn “and the intent to form a joint venture with Foxconn,” court papers say.

Less than a year later, in June 2022, Jefferies, Foxconn and Lordstown Motors reached out to 50 potential investors and strategic original equipment manufacturer partners “seeking potential acquirors and/or strategic partners.”

No “actionable indications of interest” were received, Finger said.

Lordstown Motors filed Chapter 11 bankruptcy June 27 with no debt and $136 million in unencumbered cash.

At a court hearing Aug. 3, Lordstown’s lead attorney, Thomas E. Lauria, told Judge Walrath the company hoped to conclude the sale as soon as Sept. 12.

“It appears, given the indications of interest, the debtor has generated substantial interest in selling its assets. …We need to see if a stalking horse agreement can be realized,” the judge said.
Walrath set Aug. 24 as the deadline for the stalking horse to set a low-end bid for the assets.

No stalking horse emerged.

The new Sept. 18 bid deadline means that if an auction is required, it now will take place Sept. 27. The court hearing on the sale has been rescheduled to Oct. 18 with the closing Oct. 31.

Meanwhile, Lordstown Motors wants court permission to move Foxconn to the end of the line and be paid nothing for its preferred equity shares in the EV startup.

The adversary complaint Lordstown filed against Foxconn in conjunction with the Chapter 11 case remains in limbo, still on the bankruptcy court docket with Foxconn yet to file its response. Lordstown accuses Foxconn of “fraudulent conduct [that destroyed] the business of an American startup.”

In the Chapter 11 case, Foxconn has filed an objection and reservation of its rights regarding the assignment of contracts, unexpired leases and how much Foxconn owes the Taiwanese company. Foxconn notes the agreement in principle it signed with Lordstown in 2021 cannot be assigned in a sale of its assets or its terms cherry-picked. Moreover, Foxconn claims it’s owed $286,121.35 under its master supply agreement with Lordstown.

This week a limited objection was filed by Workhorse Group Inc., which licensed its intellectual property to Lordstown Motors in November 2019. LMC terminated the agreement in March; Workhorse reserves the right to object to the sale or assignment of its intellectual property.

Another limited objection was filed this week by the lead plaintiff in the class action complaint, Lordstown Motors Corp. Securities Litigation, pending in the U.S. District Court in Youngstown. This objection “raises a concern that the debtors have not identified what obligations will be imposed upon a successful bidder in the debtors’ sale process with respect to the preservation of evidence potentially relevant to the Securities Litigation,” according to court papers.

Copyright 2024 The Business Journal, Youngstown, Ohio.