BY Fraser Tennant
Amid accusations that its investment partner Foxconn has reneged on its commitments, struggling US electric truck manufacturer Lordstown Motors Corp. has filed for Chapter 11 bankruptcy.
As part of the bankruptcy process, Lordstown has filed litigation detailing its description of Foxconn’s fraud and wilful and consistent failure to live up to its commercial and financial commitments to Lordstown, arguing that Foxconn’s actions led to material damage to Lordstown as well as its future prospects.
Under the partnership, Lordstown had agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility, which is one of the largest in North America, along with its highly talented and experienced manufacturing and operational employees.
The Chapter 11 filing will also allow Lordstown to commence a comprehensive marketing and sale process for the Endurance all-electric vehicle (EV) and related assets, as well as provide a prospective buyer with a going concern asset that is free and clear of any legacy issues.
“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,” said Edward Hightower, chief executive and president of Lordstown. “We subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform.”
“However, despite our best efforts and earnest commitment to the partnership, Foxconn wilfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximise the value of Lordstown's assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”
To ensure a smooth transition into Chapter 11, the company filed with the bankruptcy court a series of customary ‘first day’ motions to continue operating the business and uphold its commitments to stakeholders during the process. Lordstown enters Chapter 11 with significant cash on hand and is debt-free.
“While in Chapter 11, Lordstown will continue to support our customers,” concluded Mr Hightower. “We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners.”