The Canoo bankruptcy judge blocked attempts by mysterious investors to disrupt the sale of EV Startup’s assets.
At Tuesday’s hearing, Judge Brendan Linehan Shannon had no position to adjudicate a British-based financier named Charles Gerson, who lacked a position to request the sale of the canoe himself to CEO. Gerson had told the court he was willing to pay up to $20 million for Canoo’s assets, but he missed the deadline to formally file the bid. Gerson also made no clear where he was raising the money, causing the bankruptcy councillor in the case to raise concerns that the bid could be blocked by the US Foreign Investment Commission.
The last remaining challenge to asset sales comes from Harbinger Motors, a commercial electric truck startup created by a few former Canoo employees. Harbinger opposed the sale before it was finalized in April. The judge denied Harbinger’s objection, but the company appealed the decision.
Gerson’s lawyer Jason Angelo framed a client’s attempt to disrupt sales as a “David vs. Goliath type issue.” Angelo attempted to argue during a hearing with Gerson’s conversation with the bankruptcy trustee (submitted to court under seal) that he came to believe he had to formalize the bid until the end of April. He also reiterated the allegations made in Garson’s original filing regarding the sale as the assets were eventually sent to Canoo CEO Anthony Aquila.
“I think it makes sense to allow us to start over here,” Angelo said, citing his client’s “integrity and seriousness.” “I know it asks a lot.”
Mark Felger, the lawyer representing the bankruptcy trustee, opposed the issue by saying there was little dispute and that negotiations were fair.
“We think it’s pretty clear from a factual standpoint. He never said it, she said,” he said. “Your honor, it’s all in the email. I’ve read it over and over again. There’s no misunderstanding. There’s no deception. It was clear how it was going. He knew there was a ninth sales hearing.
Regarding fairness in the sales process, Felger said he and the trustee “are concerned (with the CEO) about this insider sales.”
“But they were right, and we were the people we negotiated hard. We went back and forth dozens of times about that agreement,” he said. Felger also reiterated the trustee’s claims made in previous applications and testimony that the costs of maintaining Canoo’s assets, particularly the battery pack, were too expensive. He said long-term drugs in the sales process can damage the value of the property.
Judge Shannon took control over Gerson after hearing arguments from Angelo, Felger and Aquila’s lawyers. He said the financiers lacked a position to properly assert his claim to evict the sale as they did not borrow money from Canoo and therefore did not file formal bids before the deadline.
“I am sympathetic to Mr. Gerson’s frustration about what I feel and satisfaction, and a real interest in offering a great bid and purchasing these assets,” Shannon said. “But it’s a complicated process run by the trustees of Chapter 7 and I don’t think Mr. Gerson handles exactly what that process is and what it takes to be fully involved in it.”
Shannon also revealed who Aquila was to the trustee from the start, pointing out that his role as CEO alone did not prevent him from purchasing assets for his company.
“I was late in the process and wanted an opportunity to participate and participate in my bid. The outcome was not what I wanted, but I would like to respect the court’s decision and extend the congratulations to Tony Aquila,” Gerson said in a statement to TechCrunch.
This story was updated in a statement by Charles Gerson.