The Approval of Canoo’s Asset Sale to CEO Anthony Aquila
The sale of bankrupt electric vehicle (EV) startup Canoo’s assets to its CEO, Anthony Aquila, has been officially approved by Judge Brendan Shannon. During a hearing on Wednesday, the judge determined that the process was fair and transparent, emphasizing that no other party stepped forward with a competing bid. This decision clears the path for Aquila to acquire the majority of Canoo’s assets for approximately $4 million in cash.
Aquila’s plans for the acquired assets include offering services to high-profile clients such as NASA and the Department of Defense. These organizations had previously purchased vehicles from Canoo before the company filed for bankruptcy. Lawyers representing Aquila outlined these intentions during the proceedings, highlighting potential opportunities for the restructured business.
A Growing Trend Among EV Startups
Canoo is the latest casualty in a string of EV startups that have faced financial collapse. The list includes prominent names like Fisker, Lordstown Motors, and Nikola, all of which have filed for bankruptcy in recent years. Interestingly, Canoo is not alone in having its CEO attempt to purchase its assets during bankruptcy proceedings. Lordstown Motors’ founder and former CEO, Steve Burns, successfully acquired most of his company’s assets, while Trevor Milton, the controversial founder of Nikola, is currently pursuing a similar strategy.
Interest in Canoo’s Assets and Foreign Ownership Concerns
While Aquila emerged as the sole bidder, he was not the only party interested in acquiring Canoo’s assets. Mark Felger, a lawyer representing Canoo, revealed during the hearing that up to eight parties signed non-disclosure agreements (NDAs) to evaluate the assets. However, only a few came close to submitting bids. One group reportedly raised concerns due to its foreign ownership, which could have triggered scrutiny from the Committee on Foreign Investment in the United States (CFIUS). The specifics of this group’s ownership structure remain undisclosed.
Among the entities that nearly submitted bids was Harbinger, an electric truck startup founded by former Canoo employees. Harbinger recently objected to the sale, alleging that Canoo had concealed certain assets from potential buyers. Lawyers representing Aquila dismissed these claims, labeling them as baseless and lacking factual support.
The Role of Ongoing Litigation
The ongoing legal battle between Canoo and Harbinger played a significant role in shaping the asset sale. In late 2022, Canoo filed a lawsuit accusing Harbinger’s founders of misappropriating trade secrets when they left to establish their new venture. This lawsuit remains unresolved, and its outcome could have substantial implications for both parties.
John Morris, a lawyer for Harbinger, argued during the hearing that the lack of clarity surrounding the alleged trade secrets hindered the ability to accurately value Canoo’s estate. He contended that neither the trustee nor the appraisal firm possessed sufficient information to assess the case’s potential financial impact. Additionally, Morris criticized a clause in the sale agreement granting Aquila final approval over any settlement in the lawsuit, suggesting it conflicted with the trustee’s fiduciary responsibilities.
Despite these objections, Judge Shannon ruled in favor of the sale, citing the trustee’s testimony about the extensive negotiations with Aquila. According to Shannon, the process involved multiple offers and counteroffers, demonstrating that the sale was conducted in good faith.
Resolving Outstanding Objections
Other objections to the sale primarily came from companies with outstanding balances owed by Canoo or those still holding onto equipment. Felger assured the court that most, if not all, of these issues are being addressed and resolved.
What Comes Next for Canoo?
With the judge’s final order now in place, the focus shifts to how Aquila will leverage Canoo’s assets moving forward. His vision for serving government agencies like NASA and the Department of Defense could breathe new life into the struggling EV startup. However, the unresolved litigation with Harbinger looms large, potentially impacting the future trajectory of both companies.
This case underscores the challenges facing the EV industry, where ambitious startups often struggle to navigate financial and operational hurdles. As Canoo transitions under Aquila’s leadership, stakeholders will be closely watching whether this acquisition can revive the brand and deliver on its promises.
