Canoo, the electric vehicle startup that sank into bankruptcy last month, won court approval Friday to sell its assets. The identity of the buyer — none other than the company’s founder and CEO, Anthony Aquila. The decision, issued by Judge Brendan Shannon, paves the way for Aquila to buy up Canoo’s remaining assets for about $4 million in cash. This latest move is yet another high-profile example in a recent wave of EV startups falling prey to the clutches of bankruptcy and financial despair.
Canoo isn’t the only EV startup staring down the barrel of bankruptcy. It joins the pantheon of major industry collapses such as Fisker, Lordstown Motors and Nikola. These companies simply haven’t been able to find the funding and market traction they need in a highly competitive landscape. Canoo has filed notices to sell much of its remaining assets to shore up liquidity. This decision is important—especially given the continuing chaos.
In defense of the sale Judge Shannon stressed the extensive process that had gone into making this sale possible. He stated, “The trustee has run a process that has resulted in a significant offer,” and assured that the sale has been “proceeding in good faith.” This endorsement is a testament to the time and energy invested in the structuring of the sale given the difficult state of the company.
Even still, the sale was approved to proceed, but there were significant concerns raised among the parties about the legitimacy of that sale. Harbinger, an electric truck startup started by ex-Canoo employees, raised deep concerns over the transaction. They alleged that Canoo was concealing assets from prospective purchasers. In 2021, Harbinger’s founding team, along with a number of key early employees, jumped ship from Canoo to launch their new startup. Their exit has left a vacuum, and since then, hostilities have escalated.
Canoo themselves moved on late last year, suing Harbinger. Instead, they sued the company’s former employees for pilfering trade secrets on their way out the door. The lawsuit is still pending, but Canoo has not publicly provided any specifics as to what trade secrets it claims have been misappropriated. If Canoo prevails, it could result in a massive monetary award for the company. In addition, it could lead to an order barring Harbinger’s further use of the claimed trade secrets.
Specifically, Mark Felger, Canoo’s now-former counsel, disclosed that eight non-Aquila parties executed NDAs—in addition to QinView, obviously—before terminating discussions with Canoo. To understate things, they are all anxious to determine just what it is that’s for sale. Serious intent from bidders only extended to a handful, with one consortium quickly flagged as problematic thanks to foreign ownership. Perhaps most interestingly, the bankruptcy trustee acknowledged that this group’s participation would draw close attention. This might raise red flags from the Committee on Foreign Investment in the United States (CFIUS).
The sale agreement emphasizes that Canoo’s assets are crucial for its future viability, especially as it navigates through bankruptcy proceedings. The trustee’s case is that the successful conclusion of the current, protracted litigation against Harbinger might provide a big payday. Furthermore, it can result in a permanent injunction barring the improper use of Canoo’s intellectual property.
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