Nikola Founder Trevor Milton Accused of Derailing Bankruptcy Case

Nikola Asset Sale to Lucid Receives Initial Court Approval

The court hearing concerning the sale of assets from the bankrupt electric truck manufacturer, Nikola, to Lucid Motors proceeded favorably on Friday. No oppositions to the proposed transaction were initially presented, leading Delaware bankruptcy judge Thomas Horan to grant verbal approval without delay.

Late Objection Raises Concerns

However, the proceedings were interrupted near the conclusion of the Zoom call when a legal representative voiced concerns. The attorney indicated that his client harbored reservations regarding the auction’s execution.

While acknowledging these concerns could be addressed at a subsequent time, the lawyer emphasized a desire to avoid any implication of acquiescence. This statement was made to ensure his client’s silence wouldn’t be interpreted negatively in the future.

ISSO LLC and Trevor Milton’s Involvement

The lawyer represented ISSO LLC, an entity utilized by Nikola’s founder, Trevor Milton, to assess a potential bid for the company’s assets. Previously, Milton, through ISSO LLC, had been denied access to tour Nikola’s Arizona manufacturing facility – a ruling upheld by Judge Horan last week.

Despite the smooth initial approval of the sale to Lucid, this late intervention signaled that Milton may not be finished challenging his former company.

Potential Challenges to Arbitration Award

Recently pardoned by President Donald Trump, thereby avoiding a four-year prison sentence, Milton might attempt to contest a $168 million arbitration award previously mandated against him by Nikola last year.

This arbitration award is a crucial element within Nikola’s ongoing Chapter 11 bankruptcy proceedings. Prior to filing for bankruptcy, Nikola successfully settled a shareholder class action lawsuit stemming from misleading statements made by Milton during his tenure as CEO.

The settlement was contingent upon the distribution of the aforementioned arbitration award to the shareholders involved.

Remaining Assets and Future Sales

Following the Lucid transaction, Nikola retains certain assets it intends to sell. Lucid’s purchase encompassed the factory located in Coolidge, Arizona, the lease for the Phoenix headquarters, and associated manufacturing equipment.

Furthermore, Lucid will be extending employment offers to approximately 300 Nikola employees.

Nikola still possesses its stock of hydrogen-powered heavy-duty trucks and other related equipment.

Nikola’s Counsel Responds

Joshua Morris, legal counsel for Nikola, expressed a lack of surprise regarding ISSO LLC and Milton’s attempt “to taint these proceedings” during the hearing.

“This behavior aligns with a recurring pattern we have observed,” Morris stated. “We contend that these assertions are without merit. No supporting evidence or specific details were offered when requested. The Court should therefore regard these claims with skepticism.”

Morris further asserted that Milton’s involvement in the sale process appears to be “an attempt to inflict further damage on the company, for reasons that remain unclear.”

He suggested that Milton may be attempting to undermine the sale process to influence the outcome of the arbitration award.

“It’s possible the intention is to create a situation where [Nikola] is compelled to accept a significantly undervalued settlement offer due to financial desperation,” Morris explained. “However, we firmly believe that we conducted the sale process with transparency and included all relevant parties.”

Hearing Concludes

The legal teams concluded their statements, and the hearing was adjourned. A representative for Milton did not immediately respond to a request for comment.