The U.S. bankruptcy court on Wednesday granted approval to electric vehicle maker, Lordstown Motors (OTC:RIDEQ) (formally sold under the NASDAQ symbol: RIDE) to sell its manufacturing assets to a new entity associated with its founder and former CEO Stephen Burns for a sum of $10.2 million.
Under the umbrella of LAS Capital, primarily helmed by Burns, the acquisition will encompass Lordstown's intellectual property, business documentation, as well as equipment, notably assembly lines dedicated to electric vehicle motors and batteries.
During a court hearing in Wilmington, Delaware, U.S. Bankruptcy Judge Mary Walrath sanctioned the sale, affirming that it represented the most favorable offer on the table.
The sale excludes any rights to pursue legal action against Lordstown's directors, officers, or equity owners. These rights will remain under the jurisdiction of the bankrupt company, as stated during the hearing.
Multiple investor groups have already filed claims against Lordstown and its directors, asserting that the electric truck startup deceived consumers and investors regarding its capacity to scale up electric vehicle production.
Lordstown Motors began bankruptcy proceedings in Delaware back in June, aiming to liquidate its operations following a deadlock over an assured investment from Taiwan's Foxconn.
The collaboration was intended for the advancement of Lordstown's electric pickup truck subsequent to Foxconn's acquisition of Lordstown's manufacturing facility.
Foxconn, also known as Hon Hai Precision Industry and renowned for its role in assembling Apple's (NASDAQ:AAPL) iPhones, contended that it wasn't obligated to make additional investments in Lordstown, citing the automaker's stock dropping below $1 per share.
A majority of the acquired machinery is located in an Ohio facility that is currently owned by Foxconn. LAS Capital's attorney said that LAS Capital will collaborate with Foxconn to relocate the equipment.
Burns stepped down from his position as CEO in 2021 following an internal investigation prompted by a short seller's allegations that Lordstown had exaggerated the potential of its technology and deceived investors regarding production schedules.
Lordstown's former CFO, Julio Rodriguez, who resigned alongside Burns, is also associated with LAS Capital as a minority proprietor and manager.