At a recent Congressional hearing into the ongoing bankruptcy proceedings of electric truck startup Nikola Corp., alarms were raised. These concerns particularly focused on the role of the company’s founder, Trevor Milton. The new hearing, held in Delaware, involved Nikola’s sale of its assets to Lucid Motors. Judge Thomas Horan wasted no time in approving the sale, and without any fanfare. Nikola’s attorneys suggested that Milton’s actions could muddy the waters.
Milton has been using an opaque entity called ISSO LLC to judge a competing bid for Nikola’s assets. Yet he is already enjoined from visiting the company’s Arizona factory, as Judge Horan confirmed last week in doubling down on that ruling. This limitation reveals some of the competing interests and tensions surrounding Milton’s participation in the case.
Joshua Morris, a lawyer for Nikola told the jury he did not believe that Milton had such plans in mind. He stated that Milton’s participation seems to be an “attempt to continue to harm the company for a benefit that I can’t quite ascertain.” Morris noticed a similar pattern with Milton. This is not the first time he has behaved in this manner.
“This is a pattern of behavior that we’ve seen over and over,” – Joshua Morris, a lawyer for Nikola.
Nikola is currently selling its assets to Lucid Motors. This agreement covers the Coolidge factory in Arizona, the lease on the Phoenix headquarters, and much of the manufacturing equipment. Other than this transaction, Nikola has plenty hydrogen-powered big rigs and other random equipment to still sell. Morris highlighted the strategic significance of the arbitration award to Nikola’s ongoing Chapter 11 bankruptcy proceeding. He emphasized that Milton’s actions during this process could have a major impact on it.
Morris made the case for the larger consequences of having Milton take part. He speculated it could be part of a strategy to force Nikola into a cash crunch, driving the company to accept worse settlement offers.
“Perhaps the play is to render [Nikola] desperate for support cash so that the committee [of unsecured creditors] forces the debtor to attempt or accept some low ball settlement proposal,” – (unnamed lawyer).
So far, there are no protests filed against the business with Lucid Motors. Nikola has plans to sell additional assets following this sale. This decision demonstrates their ongoing commitment to stabilize the company after unprecedented financial challenges.
A spokesperson for Milton did not respond by press time to requests for comment about the issues raised above. As Milton’s attorney argued at the hearing, those are questions they can address at a later date. Not surprisingly, they emphasized that they did not wish for anyone to think ill of their client’s silence during any ensuing court action.
The situation remains fluid as stakeholders watch closely how Milton’s actions will unfold in relation to Nikola’s ongoing bankruptcy proceedings and asset sale efforts.
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