Foxconn Technology Group lost a bid to kick Lordstown Motors Corp. out of bankruptcy, a win for the troubled electric vehicle maker as it attempts to find a new owner for its business.
(Bloomberg) — Foxconn Technology Group lost a bid to kick Lordstown Motors Corp. out of bankruptcy, a win for the troubled electric vehicle maker as it attempts to find a new owner for its business.
Judge Mary Walrath on Monday refused to dismiss Lordstown’s bankruptcy case. She rejected Foxconn’s claim that the struggling EV startup improperly sought Chapter 11 protection to gain an unfair edge in a legal dispute between the companies over a deal to make Lordstown’s flagship Endurance trucks.
Lordstown said it was running low on cash before it filed bankruptcy in June and facing an exodus of employees and customers after Foxconn said it was prepared to exit a production partnership. Under the circumstances, Judge Walrath said Lordstown had a valid reason for filing bankruptcy and is now pursuing a reasonable strategy for repaying its creditors by attempting to sell the business.
Thomas Lauria, a lawyer representing Lordstown, said the Ohio-based manufacturer is formulating a debt repayment plan and is hopeful that it will find buyers in Chapter 11 for all or parts of its business. Potential buyers have until Sept. 8 to submit bids for the company’s assets, according to court documents.
“We expect to have one-or-more purchasers,” Lauria said.
Besides its dispute with Foxconn, Lordstown said it’s already used Chapter 11 to try and resolve other costly legal disputes. On Monday, Judge Walrath approved a $40 million settlement of Karma Automotive LLC’s allegations that Lordstown lifted designs and technology to develop its Endurance truck.
The bankruptcy is Lordstown Motors Corp., 23-10831, US Bankruptcy Court for the District of Delaware.
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