View of Lordstown Motors sign, photo by R. Michael Semple

LORDSTOWN — Thirteen parties have shown an interest in acquiring all or some of the assets of Lordstown Motors Corp. out of bankruptcy, an attorney for the electric-vehicle company said Thursday during a court hearing in Delaware.

“Four of those are to acquire all or substantially all of the company’s assets as a going concern. Four of them are for different components of the company’s assets and five of them are from liquidators who would like to buy some or all of the company’s assets either for an upfront cash fee or for a fee and a shared participation in the proceeds from their sale,” Thomas E. Lauria, an attorney with White & Case LLP, said.

In common parlance, “going concern” is the company’s ability to stay in business.

Only one, he said, has included a condition regarding Karma Automotive LLC — referring to the intellectual property federal lawsuit pending between the California-based company and Lordstown Motors — “but all are actively going forward at this time,” Lauria said.

“I will tell the court that some of these proposals have big issues and problems and some are more promising. At this time, we have not eliminated any of the proposals from consideration and we are doing what I think this court would expect us to do, which is to work with the bidders, to respond to their questions and work to get either one bidder or an aggregation of bidders together to provide a proposal that can be brought forward for stalking horse protection by the deadline …,” Lauria said.

A stalking horse bidder is the initial bidder with whom a debtor, in this case Lordstown Motors, negotiates a purchase agreement. The stalking horse bidder sets the low-end purchase price.

Thursday’s hearing was to determine the sale procedures, which included the stalking horse bid and other deadlines. It was a continuation of a hearing from July 27 before Judge Mary F. Walrath, who wanted to see if any potential buyers showed interest in the company by Monday’s deadline to do so.

Lordstown Motors had proposed Aug. 17 as the deadline for a stalking horse bidder in the sale process timeline it recommended to the court.

“I think the important thing for this estate is to preserve optionality at this point. We currently have 13 interested parties who are engaged in looking at a transaction to buy some or all of the assets of the company. If we were to hit the pause button now and restart it later, it’s unclear how many, if any, of those bidders would come back,” Lauria said.

Walrath pushed the stalking horse bid deadline back one week to Aug. 24 and set a Sept. 8 deadline for all bids.

“Even in the absence of the Karma issue, I am concerned with the timing of the sale process,” Walrath said. “Given the debtor’s cash on hand, I’m not certain why it needs to proceed as quickly as the debtor proposes.”

Testimony last week and court documents related to the case indicate Lordstown Motors has $130 million in cash on hand.

Walrath held off setting an auction deadline, which Lordstown Motors had proposed to be Aug. 31, “until the court sees what are the viable bids and path forward as the debtor is describing it,” she said.

She agreed to hold Oct. 5 on the calendar for a sale hearing. Lordstown Motors had proposed Sept. 12.

KARMA OBJECTS

Karma’s attorney James Sowka with Seyfarth Shaw LLP objected to the deadlines Lordstown Motors had proposed, arguing it was inappropriate to proceed down that timeline because Karma’s case against Lordstown Motors has been allowed to proceed to trial.

“To the extent the bid procedures as proposed proceed, it would potentially raise a situation where the property interests could be at dispute before this court … while they are also at issue in California,” he said. “We just think that duplication of resources isn’t going to benefit any of the parties,” Sowka said.

Last week, Walrath lifted a stay automatically imposed on the lawsuit when Lordstown Motors filed Chapter 11 bankruptcy protection June 27, allowing the case out west to proceed.

Karma sued Lordstown Motors in October 2020 in U.S court in California, claiming Lordstown Motors stole trade secrets about Karma’s infotainment system and plundered a specialized team of Karma employees who were designing it for use in the Lordstown Motors’ truck, the Endurance.

The trial in California is set to begin Sept. 12 and last two to three weeks. The company is seeking nearly $1 billion in relief.