Court Note Register.
A new entity controlled by CEO Anthony Aquila has proposed to buy “basically all” assets for $4 million in cash. The sale will also erase $11 million in debt owed by a financial company run by Aquila, which borrowed money from startups in the last few months.
The sales advice comes six weeks after Canoo filed for liquidation in Delaware Chapter 7 and weakened its business. The startup, which was publicly offered part of its merger with the Special Purpose Acquisition Company in 2020, never sold its small number of electric vans to government entities such as NASA, the U.S. Postal Service and the Department of Defense until it failed.
CANOO told the court that as of February 24, its assets were approximately $145 million, liabilities were approximately $175 million, and cash and equivalent value was approximately $12 million. According to the document, other relevant parties can submit “higher, better quotes” to the company’s assets by the March 28 deadline.
However, the bankruptcy trustee wrote in the filing that the “best course of action” would be for sale to Aquila. The trustees cite many reasons, such as “the lack of financing available at present” to support electric vehicle manufacturing.
He wrote that failures of other EV startups, such as Fisker and Nikola, although he did not specifically name them, resulted in “EV-related assets” available “at the price of fire.” He also wrote that Canoo’s real estate does not have the funds to pay for the “rental, security expenses and insurance necessary to maintain asset integrity.”
Just after, Aquila’s new entity (called WHS Energy Solutions, Inc.) and created in Delaware – will acquire CANOO’s manufacturing equipment, completed vehicles, intellectual property, contracts, and other inventory and assets. WHS Energy Solutions has not taken over any leases from Canoo and is not responsible for any claims made by other creditors against Canoo’s property.
Aquila told bankruptcy trustees that the “main motivation” for buying assets is that the CEO “desires to commemorate [Canoo’s] Committed to providing services and support to certain government programs. ”
“While the viability of all government spending is currently uncertain, the Buyer has been advised by these agencies that unless they can be assured that the Buyer can provide assurance promptly that it will be able to continue to provide the services and support provided by the Debtors, the programs will be materially delayed and the government will have to begin the time-consuming process of seeking and qualifying other contractors,” the trustee wrote in the filing.
Even in the electric vehicle space, it is not uncommon for CEOs or founders who try to buy assets for bankrupt startups. In 2023, former CEO of bankrupt EV startup Lordstown Motors purchased Most of its assets and founded a new company called Landx Motors. However, these assets are often sold to other companies or auctioned into parts.
It is not clear how Aquila successfully completed the deal and how the plan handles his assets. The CANOO CEO did not respond to a request for comment.
Only Aquila’s financial companies and related entities hold “secured” claims, meaning their debts are backed by Canoo’s promised collateral. Debts owed to many of its other creditors – including auto supplier Magna (owed nearly $3 million), and financial adviser Yorkville (selling millions of shares of CANOO shares, owing $7 million) lags behind Aquila’s lag.
