By Dietrich Knauth
NEW YORK (Reuters) - Electric vehicle company Lordstown Motors (OTC:RIDEQ) received U.S. bankruptcy court approval Wednesday to sell its manufacturing assets to a new company affiliated with its founder and former CEO Stephen Burns for $10.2 million.
LAS Capital, majority-owned by Burns, will acquire Lordstown's intellectual property, business records, and machinery including assembly lines for electric vehicle motors and batteries.
U.S. Bankruptcy Judge Mary Walrath approved the sale at a court hearing in Wilmington, Delaware, saying it was the best available offer.
The sale does not include any rights to pursue legal claims against Lordstown's directors, officers or equity owners, which will remain with the bankrupt company, Lordstown Motors' attorney David Turetsky said at the court hearing. Several investor groups have already brought claims against Lordstown and its directors, alleging that the electric truck startup misled consumers and investors about its ability to ramp up electric vehicle production.
Lordstown Motors filed for bankruptcy in Delaware in June, seeking to wind down its business after failing to resolve a dispute over a promised investment from Taiwan's Foxconn, which had agreed to collaborate on the development of Lordstown's electric pickup truck after its purchase of Lordstown's manufacturing center.
Foxconn, formally called Hon Hai Precision Industry (2317.TW) and best known for assembling Apple (NASDAQ:AAPL)'s iPhones, has argued that it was not required to make further investments in Lordstown after the automaker's stock fell below $1 per share.
LAS Capital's attorney Jennifer Madden said that it was not purchasing any Endurance trucks for resale to the public and not acquiring any vehicles that had already been sold to customers and are subject to recalls from the U.S. Department of Transportation.
Most of the purchased equipment is located at an Ohio manufacturing facility now owned by Foxconn, and Madden said LAS Capital will work with Foxconn to remove the machinery.
Burns resigned from the role of CEO in 2021, following an internal investigation into a short seller's claim that Lordstown had overstated the viability of its technology and misled investors about production plans. Burns later sold his remaining equity in the company before it went bankrupt.
Lordstown's ex-CFO Julio Rodriguez, who resigned at the same time as Burns, is also involved with LAS Capital as a minority owner and manager.