Financially troubled electric automaker Lordstown Motors filed Chapter 11 bankruptcy Tuesday, and filed a complaint against Taiwanese corporation Foxconn, with which Lordstown had a partnership that turned acrimonious.
Under a Chapter 11 bankruptcy, the corporation asks the court to reorganize the business, while existing management remains in control of the company’s assets as a trustee. The reorganization plan is subject to a vote of the relevant creditors and may be rejected.
According to a statement issued by Lordstown, “The company enters Chapter 11 with significant cash on hand and is debt-free.”
Lordstown is commencing a comprehensive marketing and sale process for the rights to the Endurance vehicle and related assets, the company said in a release. The company “seeks to maximize the value of the company’s assets and efficiently resolve its contingent liabilities through a Chapter 11 restructuring process. Lordstown has filed motions with the Court seeking authority to commence a comprehensive marketing and sale process under section 363 of the U.S. Bankruptcy Code to realize the full value of its innovative Endurance vehicle and related assets.”
Lordstown CEO & President Edward Hightower confirmed the company plans to move quickly to move into its next chapter.
“We remain confident that an orderly, expedited sale process will maximize value for our stakeholders and enable the talent and technology behind the Endurance to find new and supportive ownership,” he said. “While in Chapter 11, Lordstown will continue to support our customers. We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners for believing in the Endurance and in the EV evolution.”
The Lordstown Endurance
Referring to the company’s product, Hightower said, “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”
The Lordstown Endurance electric pickup truck is a fully homologated and certified U.S. road-legal vehicle with an MSRP around $65,000. Limited production was launched and then suspended earlier this year, with a recall of more than half of total production.
Lordstown says that the Endurance design, “can serve as a springboard for the right OEM or other strategic purchaser into the broader North American EV full-size truck market at a fraction of the cost and time it would take to develop a program from the ground up.”
After driving the Endurance, TheDetroitBureau.com’s Editor-in-Chief Paul Eisenstein wrote, “On the whole, Lordstown has done a reasonably good job pulling together the new Endurance. It appears to have reasonable cargo and towing capacity and a surprisingly roomy interior. But there’s a growing list of alternatives, such as the Ford F-150 Lightning and Rivian R1T, that offer more features and functions, as well as increased power and range …. Nonetheless, Lordstown might yet find a market for the new Endurance among those that want a basic but functional all-electric work truck.”
The truck was a finalist for the 2023 North American Truck of the Year award.
Dispute with Foxconn
Lordstown’s had a simmering dispute with Foxconn for some time. That dispute has now flared into litigation. At the same time as it filed for reorganization, Lordstown also filed suit against global technology company Hon Hai Technology Group and certain of its affiliates, including Foxconn Ventures Pte. Ltd.
The litigation alleges fraud and willful and consistent failure by Foxconn to live up to its commercial and financial commitments to Lordstown.
“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders,” Hightower said. “We will vigorously pursue our litigation claims against Foxconn accordingly.”
Additional information on the Chapter 11 filing, including access to court documents, is available at www.kccllc.net/lordstown.