Lordstown Motors, an aspiring original equipment manufacturer (OEM) of electric light-duty vehicles focused on the commercial fleet market, has filed for Chapter 11 and has sued global technology company Hon Hai Technology Group and certain of its affiliates, (collectively, Foxconn), in the United States Bankruptcy Court for the District of Delaware.

The litigation accuses Foxconn of fraud and willful and consistent failure to live up to its commercial and financial commitments to Lordstown. The lawsuit charges that Foxconn’s actions led to material damage to Lordstown as well as its future prospects.

Lordstown is commencing a comprehensive marketing and sale process for the Endurance electric pickup and related assets. To accomplish this expeditiously and provide a prospective buyer with a going concern asset that is free and clear of any legacy issues, Lordstown is restructuring under Chapter 11. Lordstown further anticipates that the restructuring will enable an expedited timeline for hearing Lordstown’s litigation against Foxconn.

We have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential—and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform. Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.

—Edward Hightower, CEO & President of Lordstown

The complaint filed against Foxconn centers on a partnership Lordstown’s management team entered into with Foxconn to combine Lordstown’s innovation, technology, accomplished vehicle engineering team and manufacturing facility in Lordstown, Ohio with Foxconn’s resources, supply chain capabilities and position as one of the world’s largest electronics manufacturers with stated significant automotive capabilities to form a new, scalable joint vehicle development platform. (Earlier post.)

Under the partnership, Lordstown agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility—one of the largest in North America—along with its manufacturing and operational employees. The up-front purchase price for the Lordstown manufacturing facility reflected the expected benefits of the contractual assurances from Foxconn that Foxconn would support the Endurance pickup truck in a variety of ways and follow through on a joint vehicle development program, leveraging what was purported to be Foxconn’s established and extensive EV ecosystem and meeting its commitments to the Lordstown community. (Earlier post.)

The lawsuit charges that Foxconn had no intention of living up to its commitments, particularly with respect to the new vehicle development platform. According to the lawsuit, Foxconn simply used its variety of contractual arrangements with the Company as a tool to destroy Lordstown’s business, while leveraging resources gained through the partnership to advance its own business interests.

Jefferies is acting as financial advisor to the Company, and White & Case LLP is acting as legal counsel.