Canoo Asset Sale Allowed: Judge Rejects Mystery Investor's Bid

Canoo Asset Sale Protected from Disruption by Court Ruling

The bankruptcy judge overseeing Canoo’s case has prevented a challenge to the sale of the electric vehicle company’s assets from proceeding. This decision effectively safeguards the ongoing transaction.

Financier's Bid Dismissed

During a hearing on Tuesday, Judge Brendan Linehan Shannon determined that Charles Garson, a U.K.-based financier, did not have the legal right to request the cancellation of the sale to Canoo’s CEO. Garson had indicated a willingness to offer up to $20 million for the assets, but failed to submit a formal bid within the stipulated timeframe.

Concerns were also raised regarding the source of Garson’s funding. The bankruptcy trustee expressed apprehension that the bid might be scrutinized and potentially blocked by the Committee on Foreign Investment in the United States.

Remaining Challenge from Harbinger Motors

Currently, the only remaining objection to the asset sale originates from Harbinger Motors, an electric commercial trucking company founded by former Canoo personnel. Harbinger previously contested the sale before its finalization in April.

Although the judge initially dismissed Harbinger’s objection, the company has subsequently filed an appeal against that ruling.

Arguments Presented in Court

Jason Angelo, representing Garson, characterized his client’s attempt to intervene as a contest between an individual and a larger entity. Angelo argued that communications with the bankruptcy trustee – documented in sealed court filings – led Garson to believe he had until the end of April to submit a formal offer.

He reiterated claims from Garson’s initial filing, alleging the sale was inequitable due to the assets being acquired by Canoo’s CEO, Anthony Aquila.

“Allowing a reconsideration would be appropriate in this situation,” Angelo stated, emphasizing “the sincerity and earnestness” of his client. “I acknowledge this is a significant request.”

Trustee Defends Sale Process

Mark Felger, counsel for the bankruptcy trustee, countered that the facts were straightforward and the negotiations were conducted fairly.

“The situation is quite clear regarding the facts. There is no conflicting testimony,” he informed the judge. “All correspondence is available for review. I have examined it extensively and find no miscommunication or deception. The process was transparent, and he was aware of the sale hearing date, yet chose not to file a bid.”

Felger addressed concerns about the sale to the CEO, stating that the trustee had been “concerned about this insider sale.”

“However, they were the ones who stepped forward, and we engaged in rigorous negotiations, revising the agreement numerous times,” he explained. He also reinforced the trustee’s earlier assertions that maintaining Canoo’s assets, particularly the battery packs, incurred substantial costs, and prolonging the sale process could diminish the estate’s value.

Judge's Ruling

Following arguments from Angelo, Felger, and counsel for Aquila, Judge Shannon swiftly ruled against Garson. He determined that the financier lacked the necessary standing to challenge the sale, as he was not a creditor of Canoo and had not submitted a formal bid by the deadline.

“I understand Mr. Garson’s disappointment and recognize his genuine interest in submitting a potentially better offer,” Shannon said. “However, he did not fully grasp the complexities of the process overseen by the chapter seven trustee and the requirements for participation.”

The judge also clarified that Aquila’s position as CEO did not disqualify him from acquiring the company’s assets.

Garson's Response

“I entered the process late and hoped for the chance to participate and submit my bid. While the result wasn’t what I anticipated, I respect the court’s decision and congratulate Tony Aquila,” Garson stated in a communication to TechCrunch.

This report has been updated to include a statement from Charles Garson.