SEC, Foxconn, former investors resist Lordstown Motors' reorganization plan
Lordstown Motor’s proposed bankruptcy reorganization plan is being met with resistance from some former investors, its one-time business partner Foxconn, and the Securities and Exchange Commission.
Objections from four entities have been filed asking a bankruptcy judge to deny Lordstown Motors’ disclosure statement, solicitation, and proposal to conduct a vote by creditors on the reorganization plan.
The Security and Exchange Commission is investigating whether any of LMC, and others, may have engaged in activities that violated the federal securities laws.
The SEC notes that if violations are found, it could result in monetary claims for what the Commission calls “disgorgement of ill-gotten gains and/or civil monetary penalties.”
The objection from the SEC claims, among other things, that LMC’s disclosure statement fails to provide unsecured creditors with an estimated recovery on their claims and classifies unsecured claims in two separate classes with different treatment.
Foxconn and two investor groups that are involved in other legal battles with Lordstown Motors have also filed objections to LMC’s reorganization plan.
The objections come just days after investors including former LMC CEO Steven Burns announced a $10 million dollar offer for the company’s assets and the assumption of certain liabilities.
Approval of the sale is scheduled for a hearing on October 18, 2023.