The CEO of Canoo is shopping for practically the entire bankrupt EV startup’s belongings, in line with a court docket filing.
A brand new entity managed by the CEO, Anthony Aquila, has provided to buy “considerably all” of the belongings for $4 million in money. The sale may even wipe clear a more-than-$11 million debt Canoo owed to a monetary agency run by Aquila, which loaned cash to the startup throughout its remaining months.
The sale proposal comes simply six weeks after Canoo filed for a Chapter 7 chapter liquidation in Delaware and wound down its enterprise. The startup, which went public in 2020 as a part of a merger with a particular function acquisition firm, by no means offered greater than a handful of its electrical vans to authorities entities like NASA, america Postal Service, and the Division of Protection, earlier than it failed.
Canoo has instructed the court docket it has round $145 million in belongings and $175 million in liabilities, and round $12 million in money and equivalents, as of February 24. Different events can submit “greater and higher gives” for the corporate’s belongings earlier than a deadline of March 28, in line with a submitting.
However the chapter trustee wrote within the submitting that the “greatest plan of action” could be to proceed with the sale to Aquila. The trustee cited various causes for this, like a “lack of financing presently obtainable” to assist EV manufacturing. He wrote that the failure of different EV startups (like Fisker and Nikola, although he didn’t title them particularly) has produced a “glut of EV associated belongings” which are obtainable “at fire-sale costs.” He additionally wrote that Canoo’s property doesn’t have the cash to cowl “rents, safety prices, and insurance coverage needed to keep up the integrity of the belongings.”
So long as it goes by means of, Aquila’s new entity — known as WHS Vitality Options, Inc. and created in Delaware — will obtain Canoo’s manufacturing tools, accomplished autos, mental property, contracts, and different stock and belongings. WHS Vitality Options just isn’t taking up any of Canoo’s leases, and won’t be accountable for any of the claims different collectors have in opposition to Canoo’s property.
Aquila has instructed the chapter trustee {that a} “principal motivation” for getting the belongings is the CEO’s “need to honor [Canoo’s] dedication to supply service and assist for sure authorities applications.”
“Whereas the viability of all authorities spending is presently unsure, the Purchaser has been suggested by these businesses that except they are often assured that the Purchaser can present assurance promptly that will probably be capable of proceed to supply the companies and assist offered by [Canoo], the applications will probably be materially delayed and the federal government must start the time-consuming technique of looking for and qualifying different contractors,” the trustee wrote within the submitting.
CEOs or founders making an attempt to purchase up the belongings of their bankrupt startups just isn’t unusual, even on the earth of electrical autos. In 2023, the previous CEO of bankrupt EV startup Lordstown Motors bought most of its belongings and began a brand new firm known as LandX Motors. However most of the time, the belongings get offered to different firms or auctioned off in items.
It’s unclear what Aquila plans to do with Canoo’s belongings if he’s profitable in finishing the transaction. The Canoo CEO didn’t reply to a request for remark. Solely Aquila’s monetary agency and associated entities held “secured” claims, which means their debt was backed by collateral pledged by Canoo. The money owed owed to its many different collectors — which embrace automotive provider Magna (owed practically $3 million), and monetary advisors Yorkville (which offered hundreds of thousands of shares of Canoo inventory and are owed $7 million) are behind Aquila’s in line to receives a commission again.