Canoo CEO to Acquire Bankrupt EV Startup's Assets

Canoo Assets to be Acquired by CEO Amid Bankruptcy Proceedings

According to a recent court document, the Chief Executive Officer of Canoo is poised to acquire a substantial portion of the defunct electric vehicle company’s assets following its bankruptcy filing.

Asset Purchase Details

A newly formed entity under the control of Anthony Aquila, Canoo’s CEO, has submitted a bid to purchase “substantially all” of the company’s assets for a sum of $4 million in cash. This transaction would also effectively eliminate over $11 million in debt Canoo owed to a financial firm managed by Aquila, which had previously provided funding to the startup during its final operational period.

Recent Bankruptcy Filing and Company History

The proposed sale emerges merely six weeks after Canoo initiated Chapter 7 bankruptcy liquidation proceedings in Delaware, subsequently ceasing its business operations. The company, which became publicly traded in 2020 through a merger with a special purpose acquisition company, had limited sales success, delivering only a small number of its electric vans to governmental organizations such as NASA, the United States Postal Service, and the Department of Defense prior to its collapse.

Financial Status and Potential Bids

Canoo reported approximately $145 million in assets and $175 million in liabilities as of February 24th, alongside roughly $12 million in cash and cash equivalents. The court filing indicates that other interested parties have the opportunity to submit competing offers for the company’s assets before a deadline of March 28th.

Trustee's Recommendation

However, the bankruptcy trustee has recommended approving the sale to Aquila, citing several factors. A key consideration is the current “lack of financing currently available” to sustain electric vehicle manufacturing operations.

Market Conditions and Asset Valuation

The trustee highlighted the proliferation of EV-related assets resulting from the failures of other EV companies – such as Fisker and Nikola – leading to a “glut” and consequently, “fire-sale prices.” Furthermore, the estate lacks sufficient funds to cover essential expenses like rent, security, and insurance required to preserve the asset’s condition.

Assets Included in the Sale

If finalized, Aquila’s new entity, WHS Energy Solutions, Inc., established in Delaware, will gain ownership of Canoo’s manufacturing equipment, finished vehicles, intellectual property, existing contracts, and other inventory. Importantly, WHS Energy Solutions will not assume any of Canoo’s lease obligations and will not be liable for claims made by other creditors.

Motivation for the Acquisition

Aquila has conveyed to the bankruptcy trustee that a primary driver for the asset purchase is his “desire to honor [Canoo’s] commitment to provide service and support for certain government programs.”

Government Program Continuity

The trustee’s filing emphasizes that government agencies have indicated the necessity of continued service and support from a viable provider to avoid significant delays and the need to initiate a new contractor selection process. Unless assurance of ongoing support can be provided, these programs face potential disruption.

Precedent in the EV Sector

The practice of CEOs or founders acquiring the assets of their bankrupt startups is not uncommon within the electric vehicle industry. In 2023, the former CEO of Lordstown Motors similarly purchased most of its assets and launched a new venture, LandX Motors. However, asset sales frequently result in dispersal to other companies or through auctions.

Future Plans Remain Undisclosed

Aquila’s specific plans for the acquired Canoo assets remain unclear, as he has not yet responded to requests for comment.

Creditor Claims and Payment Hierarchy

Only Aquila’s financial firm and affiliated entities hold “secured” claims, meaning their debt is backed by collateral. Other creditors, including automotive supplier Magna (owed approximately $3 million) and financial advisors Yorkville (owed $7 million for shares of Canoo stock), are positioned lower in the priority for repayment.