In a surprising turn of events for the electric vehicle (EV) industry, Canoo News is making headlines again as CEO Anthony Aquila is set to potentially repurchase substantially all of the defunct EV startup’s assets. This development comes shortly after Canoo’s Chapter 7 bankruptcy filing, signaling a possible second life for the company’s technology and resources. According to court documents, a new entity under Aquila’s control, WHS Energy Solutions, Inc., has offered $4 million in cash for Canoo’s assets. This move also aims to resolve a significant debt of over $11 million owed by Canoo to a financial firm associated with Aquila.
The proposed acquisition surfaces merely six weeks after Canoo declared Chapter 7 bankruptcy liquidation in Delaware, effectively ceasing its operations. Despite going public in 2020 via a special purpose acquisition company merger, Canoo struggled to achieve commercial success. The company only managed to deliver a limited number of its electric vans to government bodies, including NASA, the United States Postal Service, and the Department of Defense, before succumbing to financial pressures.
Court filings reveal that as of February 24, Canoo’s financial status included approximately $145 million in assets against $175 million in liabilities, with a mere $12 million in cash and equivalents. While there’s a window for other interested parties to present superior offers until March 28, the bankruptcy trustee has indicated that accepting Aquila’s offer is likely the most pragmatic approach.
The trustee’s rationale highlights the current challenges in the EV manufacturing sector, pointing to a “lack of financing currently available” for such ventures. Furthermore, the failure of other EV startups, implicitly referencing companies like Fisker and Nikola, has led to a “glut of EV related assets” available at significantly reduced prices. The trustee also emphasized that Canoo’s estate lacks the necessary funds to cover ongoing operational costs like “rents, security costs, and insurance” required to safeguard the assets.
Under the proposed agreement, Aquila’s newly formed WHS Energy Solutions, Inc. would acquire a comprehensive range of Canoo’s assets. This includes manufacturing equipment, completed vehicles, intellectual property, contracts, and various inventory items. Crucially, WHS Energy Solutions will not assume responsibility for Canoo’s existing lease obligations or liabilities to other creditors.
Aquila has communicated to the bankruptcy trustee that a key driver behind his asset acquisition bid is a “desire to honor [Canoo’s] commitment to provide service and support for certain government programs.” The trustee’s filing further elaborates on this, stating that government agencies have expressed concerns about potential disruptions to their programs if Canoo’s service and support are not continued, necessitating a swift assurance of ongoing support from a capable entity.
The scenario of a CEO or founder attempting to buy back assets from a bankrupt startup is not unprecedented, particularly within the capital-intensive EV industry. A notable parallel is the case of Lordstown Motors, where its former CEO acquired a significant portion of the assets post-bankruptcy to launch a new venture, LandX Motors. However, it’s more typical for bankrupt companies’ assets to be sold to unrelated entities or broken down and auctioned off.
The future trajectory of Canoo’s assets under Aquila’s potential ownership remains uncertain. As of now, Aquila has not publicly disclosed specific plans for the acquired assets. A request for comment from the Canoo CEO went unanswered, leaving industry observers and stakeholders to speculate about the next chapter in this evolving Canoo news story.
It’s important to note that Aquila’s financial firm and associated entities are categorized as “secured” creditors, giving them priority in debt recovery as their loans were backed by Canoo’s collateral. Conversely, other creditors, including major automotive supplier Magna (owed nearly $3 million) and financial advisors Yorkville (owed $7 million), hold “unsecured” claims and are positioned lower in the repayment hierarchy. This situation underscores the complexities of bankruptcy proceedings and the varied interests at play in the Canoo news saga.
