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LORDSTOWN -- Negotiations surrounding the sale of assets belonging to Lordstown Motors Corp. to a company formed by its founder and former CEO were "extensive, hard fought and conducted at arm's length," and were done in "good faith," according to a filing in Lordstown Motors' bankruptcy case.
The document filed Monday by Lordstown Motors offers arguments in support of the sale to Steve Burns and his company, LAS Capital LLC -- the winning bidder for certain of the troubled electric-vehicle company's assets -- ahead of today's sale hearing in federal bankruptcy court in Delaware.
Burns and LAS Capital bid $10 million for assets related to the "design, production and sale of electric light-duty vehicles" in the commercial fleet market. The deal also includes certain liabilities.
His was the only qualified bid determined by Lordstown Motors and the company's consultant, Jefferies LLC, a New York City-based investment banking and financial advisory firm; and "was heavily negotiated on an arm's length basis," the filing states.
Lordstown Motors "negotiated several improvements" to the bid from LAS Capital and, as a result, the company believes "consummating the sale of assets" in the asset purchase agreement between Lordstown Motors and LAS Capital "will maximize the debtor's assets and is in the best interests of all parties in interest," the filing states.
Also filed Monday were declarations of support by Burns and Ryan Hamilton, a senior vice president at Jefferies.
Burns is majority equity holder of LAS Capital, while another top executive there also has connections to Lordstown Motors.
Former Lordstown Motors chief financial officer Julio Rodriguez holds the same role with LAS Capital.
Both resigned from Lordstown Motors on the same day -- June 14, 2021 -- without reason, however, under a cloud that preorder statements for the company's flagship vehicle, the battery-powered Endurance truck, were inaccurate.
Monday's court filing by Lordstown Motors states Burns and Rodriguez have "no control or influence" over Lordstown Motors' decisions and are "no different than any other third-party buyer in the court-approved sale process.
Also, Jefferies marketed the company's assets to 175 prospective purchases, of which 42 executed nondisclosure agreements to access confidential records. Nine parties submitted bids, the filing states.
Burns also is majority equity holder or LandX Holdings Inc., the parent company of LAS Capital's affiliate, LandX Motors Inc., which LAS Capital will assign its rights to under the purchase agreement before closing, according to Burns' declaration.
Lordstown Motors' filing states it has resolved all but four of the sale and cure objections filed in connection to the sale and is working to resolve another. One objection that remains outstanding, from the National Highway Traffic Safety Administration, the company argues should be overruled.
The NHTSA's objection centers on recalls surrounding the Endurance, but the agreement, the filing states, is for certain assets and not for acquiring Lordstown Motors as a going concern or any vehicles belonging to third parties.
Also, if LAS were to acquire any Endurance trucks from a third party, the company would be liable for warranty, product liability and recall obligations, the filing states.
The objection is part of today's hearing.
A "going concern" is an accounting term used to describe a business that is expected to remain in operation.