Lordstown Motors files complaint against Foxconn, Chapter 11 bankruptcy

Lordstown Motors announced a strategic restructuring process. As part of the process, Lordstown filed litigation against global technology company Hon Hai Technology Group and certain of its affiliates, or Foxconn, in the United States Bankruptcy Court for the District of Delaware. The company believes the litigation details Foxconn’s fraud and willful and consistent failure to live up to its commercial and financial commitments to the company. Foxconn’s actions led to material damage to the company as well as its future prospects, according to the company. In addition, Lordstown is commencing a marketing and sale process for the Endurance vehicle and related assets. To accomplish this, Lordstown is restructuring under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court. Lordstown further anticipates that the restructuring will enable an expedited timeline for hearing Lordstown’s litigation against Foxconn. The complaint filed against Foxconn centers on a partnership Lordstown’s management team entered into with Foxconn to combine Lordstown’s technology, vehicle engineering team and manufacturing facility in Lordstown, Ohio with Foxconn’s resources, supply chain capabilities and positionto form a new, scalable joint vehicle development platform. Under the partnership, Lordstown 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 manufacturing and operational employees. The up-front purchase price for the Lordstown manufacturing facility reflected the expected benefits of the contractual assurances from Foxconn that Foxconn would support the Endurance pickup truck in a variety of ways and follow through on a joint vehicle development program, leveraging what was purported to be Foxconn’s established and extensive EV ecosystem and meeting its commitments to the Lordstown community. The lawsuit details the fact that Foxconn had no intention of living up to its commitments, particularly with respect to the new vehicle development platform. In addition to the action Lordstown is taking to redress Foxconn’s conduct, it 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 marketing and sale process under section 363 of the U.S. Bankruptcy Code to realize the full value of its Endurance vehicle and related assets. To ensure a transition into Chapter 11, the company filed with the Court a series of customary “first day” motions to continue operating the business and uphold its commitments to stakeholders during the process. The company expects to receive approval of these routine “first day” requests in short order. The company enters Chapter 11 with cash on hand and is debt-free.