The official filing for bankruptcy was filed in Delaware on Tuesday.
The filing estimates Lordstown EV Corporation has 5,001 to 10,000 creditors and estimates $100,000,001 to $500 million in assets and liabilities.
Lordstown Motors CEO Edward Hightower filed the paperwork.
The bankruptcy documents include “first-day” motions to continue operations at LMC and uphold their responsibilities to stakeholders, according to a press release from Lordstown Motors.
The press release also says Lordstown is in the process of trying to sell the Endurance vehicle and related assets.
“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. 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.”Edward Hightower, Lordstown Motors CEO
As part of the litigation, Lordstown filed a lawsuit against the Hon Hai Technology Group and its affiliates, including Foxconn.
Hightower released this statement:
“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 – and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform. 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. We will vigorously pursue our litigation claims against Foxconn accordingly.”
Lordstown Motors announced it planned to sue Foxconn for not fulfilling its part of the agreement earlier this month.
According to the litigation, LMC says Foxconn failed to live up to its commercial and financial commitments to Lordstown. This failure led to material damage to the company and its future prospects, according to the release.
“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. As the lawsuit describes, Foxconn simply used its variety of contractual arrangements with the company as a tool to maliciously and in bad faith destroy Lordstown’s business—while leveraging resources gained through the partnership to advance its own business interests.”
Under the original agreement, LMC divested some of its most valuable assets to Foxconn, including its manufacturing facility, which the company says is one of the largest in America.
In response to the lawsuit, Foxconn released this statement:
“Hon Hai Technology Group (Foxconn) has been holding a positive attitude in conducting constructive negotiations with Lordstown Motors Corp. and in assisting LMC in finding a solution to its financial difficulties. However, during this time, LMC has continuously attempted to mislead the public and has been reluctant to perform the investment agreement between the two parties in accordance its terms.
Foxconn originally hoped to continue discussions and reach a solution that could satisfy all stakeholders, without resorting to baseless legal actions, but so far the two parties have yet to reach a consensus. The company released the following statement:
“Regarding LMC’s litigation announcement today [Tuesday] and the false comments and malicious attacks made by LMC in its external statements against Foxconn, the company reserves the right to pursue legal actions and also suspends subsequent good faith negotiations.”Statement from Foxconn
The deal between Lordstown Motors and Foxconn was finalized in May of 2022. The former GM plant said the transaction was $230 million plus approximately $27 million for operating and expansion costs.
Foxconn had also previously purchased $50 million of LMC stock from the company.
A new deal in November said Foxconn will invest $170 million in LMC stock.
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Upon completion of those investment transactions, Foxconn was expected to hold all of Lordstown Motors’ outstanding preferred stock and 18.3% of its common stock on a pro-forma basis.
According to the Associated Press, Lordstown warned the public in May it was in danger, saying “As a result of these uncertainties, there is substantial doubt regarding our ability to continue as a going concern.”
The stock fell below $1 in March. When the market closed Monday night, the stock stood at $2.76.
In February, LMC stopped production on the Endurance Vehicle and recalled the newer EVs.
While executives of the company haven’t commented beyond their written statements, Lordstown Mayor Arno Hill said he’s taking a wait-and-see attitude. He said Foxconn is operating here without any tax breaks and has between 600 and 700 employees.
“We have a lot of unknowns also, but you know, anything we get in that plant is a bonus for the village and the Valley,” he said.
Guy Coviello, president and CEO of the Youngstown-Regional Chamber, also released the following statement on Tuesday:
“It’s unfortunate that the situation has escalated to this level. Hopefully, the bankruptcy proceedings and lawsuit will get resolved quickly.
We remain unwavering in our support of Foxconn. We welcome Foxconn’s ongoing investment in our community and look forward to working with them for many years to come.“Guy Coviello
Gerry Ricciutti contributed to this report.