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In a recent filing with the U.S. Bankruptcy Court for the District of Delaware, Harbinger Motors Inc. has raised a limited objection to a proposed asset sale in the Chapter 7 bankruptcy case of Canoo, Inc. and its affiliates. Dated March 28, 2025, the objection targets the Chapter 7 Trustee’s motion to approve an asset purchase agreement (APA) with WHS Energy Solutions, Inc., a company owned by Canoo’s former CEO, Anthony Aquila.
Harbinger, an electric vehicle manufacturer and contingent creditor, argues that the sale process unfairly favors Aquila, an insider, and includes problematic provisions, such as acquiring trade secrets and settlement rights in an ongoing trade secret lawsuit. The court is urged to strike these elements and amend the APA to ensure fairness in the liquidation of Canoo’s assets, which stems from the company’s cessation of operations following its bankruptcy filing on January 17, 2025.
Key Highlights:
- Insider Advantage Concerns: Harbinger contends that the sale process lacked transparency, with Aquila benefiting from exclusive knowledge of Canoo’s trade secrets and the ongoing Trade Secret Case, disadvantaging other potential bidders.
- Contentious Consent Rights: The APA grants Aquila veto power over any settlement in the lawsuit against Harbinger, a move criticized as undermining the Trustee’s authority and lacking precedent.
- Financial Burden Shift: While Aquila seeks a 10% share of any recovery from the lawsuit, he avoids responsibility for related litigation costs or potential attorney fee awards to Harbinger.
Canoo, once focused on producing electric vehicles like vans and trucks, filed for bankruptcy after halting operations. The Trustee is now liquidating its assets, including trade secrets and a stake in the lawsuit recovery termed the “Net Harbinger Recovery.” Harbinger argues that the lack of asset valuation data—compounded by Aquila’s insider status—prevents a fair bidding process. No investment banker was hired, and the APA was finalized before an appraisal by Hilco began, per the motion filed on March 28, 2025.
RELATED: Canoo Files for Chapter 7 Bankruptcy
The objection also challenges the APA’s Section 7.3, which requires mutual consent between the Trustee and Aquila for lawsuit settlements. Harbinger asserts this cedes too much control to Aquila, who owes no fiduciary duty to Canoo’s estate or creditors. Additionally, Harbinger seeks to ensure Aquila assumes a fair share of litigation expenses if the sale proceeds. The court’s decision could reshape the sale terms, balancing insider influence with equitable asset distribution in this high-stakes bankruptcy case.
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