A FORMER CEO has emerged as a life preserver after he bid $10million to take over a bankrupt car company.
Steve Burns – the former CEO and founder of Lordstown Motors – bought the bankrupt truck producer’s assets.
The transaction to Burns is “subject to a number of customary conditions,” according to a filing to the SEC.
Lordstown Motors, an electric truck manufacturing company once praised by President Trump as “a great technology,” filed for bankruptcy in June.
The company’s bankruptcy filing valued all assets at $5.3million and had a hard deadline of September 8th for bids.
Lordstown’s tumble into bankruptcy came after years of promise.
The manufacturer took over a former GM plant in Lordstown, Ohio, garnering praise as a savior of American car manufacturing.
GM built cars in the building from 1966 to March 2019 before announcing plans to shut down the building.
The announcement galvanized a United Auto Workers strike in 2019.
At the time, Lordstown swooped in, promising to revitalize the plant with an American car future.
But plans to continue operations halted in June after safety recalls, internal investigations, and giant electric vehicle (EV) investments from legacy car brands.
LORDSTOWN’S TUMBLES
Steve Burns co-founded the company in 2019.
Burns left the company in 2021 with former Chief Financial Officer Julio Rodriguez after short sellers alleged on Hindenburg Research that they had inflated the company’s assurances of its flagship car, the Endurance pickup truck.
“For example, Lordstown recently announced a 14,000-truck deal from E Squared Energy, supposedly representing $735million in sales,” the short sellers claimed.
“E Squared is based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet.”
The company produced a handful of models before voluntarily recalling the vehicles three times, according to the Business Journal Daily.
Foxconn, a manufacturing giant that produces Apple phones in Taiwan, bought the factory and some assets from Lordstown for $230million.
Lordstown filed a lawsuit alleging “fraud and willful and consistent failure to live up to its commercial and financial commitments” against the manufacturing company during its bankruptcy.
But experts pointed the finger at Lordstown for its own failings.
‘AS DOOMED AS EVER’
“It’s just as doomed as ever,” Sam Abuelsamid, an analyst at Guidehouse Insights, said to FreightWaves after Burn’s acquisition.
“I have no more confidence that Lordstown will gain any market traction than I did yesterday.”
Burn’s acquisitions include the “design, production, and sale of electric light-duty vehicles focused on the commercial fleet market.”
“There’s only soft tooling there. Maybe they could build a couple hundred more trucks, but that’s it,” Abuelamid said.
“And nobody’s going to buy them.”
The U.S. Sun reports on other bankruptcy filings – three major airlines had huge bankruptcy deadlines in September.
Also, here is a full list of major bankrupt retailers in 2023.
