Lordstown’s Chapter 11 plan warned that the value of its assets is “necessarily speculative” at this stage in the bankruptcy and “could potentially be zero”. — Reuters
NEW YORK: Bankrupt electric vehicle manufacturer Lordstown Motors has proposed to pay nothing for Taiwan’s Foxconn’s preferred equity shares, saying it will prioritise other shareholders if an ongoing sales effort generates enough cash to repay other debts.
Lordstown Motors, named for the Ohio town where it is based, filed a Chapter 11 plan last Friday in Delaware bankruptcy court, outlining how it intends to distribute proceeds from an ongoing effort to sell its assets.
Lordstown’s Chapter 11 plan warned that the value of its assets is “necessarily speculative” at this stage in the bankruptcy and “could potentially be zero”.
Lordstown has set tomorrow as the deadline for bids, and Sept 19 for an auction.
The company’s shareholders would only be paid after its creditors and Lordstown’s Chapter 11 plan did not include an estimate of how much creditors are owed.
Lordstown reported in earlier court filings that it owed about US$20mil to 30 trade vendors, and recently agreed to pay US$40mil to settle a trade secrets lawsuit filed by rival automaker Karma.
Even if the sale generates enough money for a shareholder payout, Lordstown proposed to pay nothing to the 300,000 preferred equity shares held by its estranged former business partner Foxconn.
A lawyer for Foxconn did not immediately respond to a request for comment.
Foxconn, best known for assembling Apple’s iPhones, purchased Lordstown’s manufacturing facility as part of its push into the electric vehicle market. — Reuters
