Come Wednesday, Burns Likely to Own What’s Left of Lordstown Motors
LORDSTOWN, Ohio — The stage is set for a hearing Wednesday in U.S. Bankruptcy Court that will determine whether Lordstown Motors Corp. is authorized to sell its assets to an entity owned and operated by the company’s founder and former CEO.
Stephen S. Burns and his LAS Capital LLC were determined by the bankrupt EV startup and its investor banker to be the sole qualified bidder, offering $10 million for “specified assets … related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances and other interests,” according to court documents, plus the assumption of “certain specified liabilities.”
Declarations were filed Monday by Burns and Ryan Hamilton, senior vice president at Jefferies, asserting that the deal was conducted at arm’s length. Neither Burns nor Julio Rodriquez, former Lordstown Motors CFO and an executive at LAS, “exerted control or undue influence over the debtors,” Hamilton’s declaration states. Nor did Burns or Rodriquez have any involvement or control over the decision to sell the assets to LAS, according to Hamilton.
Burns and Rodriquez resigned June 14, 2021, from Lordstown Motors. Their exits came after an internal inquiry found “issues regarding the accuracy of certain statements regarding the company’s preorders.”
Numerous shareholder lawsuits followed. At the time, an investigation by the U.S. Securities and Exchange Commission was underway. It remains unresolved.
LAS Capital intends to assign the assets of Lordstown Motors to one of its entities, LandX Motors Inc., which also is controlled by Burns, court papers say.
Lordstown Motors and Jefferies contacted 175 potential purchasers, according to Hamilton’s declaration, of which 42 signed nondisclosure agreements. Five proposals were received as of Sept. 8, the initial bid deadline, which was subsequently extended twice “to negotiate improvements to the terms of their respective bids,” Hamilton states.
“The ongoing negotiations with the bidders, including LAS Capital, resulted in further improvements to the terms of certain bids, and two additional bids were received from interested parties by the further extended bid deadline, resulting in a total of nine bids or proposals,” he states.
Still, more time was needed to evaluate the bids, which culminated Sept. 29 in the designation of LAS Capital as the sole qualified bidder.
Judge Mary F. Walrath on Wednesday will hear objections to the sale filed by two shareholder litigants and the U.S. Department of Transportation.
The National Highway and Transportation Safety Administration wants to ensure that LAS assumes all obligations related to current and potential future recalls of all Endurance pickup trucks that were produced.
Copyright 2023 The Business Journal, Youngstown, Ohio.