Electric vehicle startup Lordstown Motors Corp. (LMC) filed for Chapter 11 bankruptcy on Tuesday, blaming its financial turmoil on alleged fraud from investment partner Foxconn, according to a press release from LMC.
LMC filed for bankruptcy to restructure its debt and continue operations after it was allegedly defrauded by major investor Hon Hai Technology Group, known internationally as Foxconn, according to an LMC press release.
LMC sued Foxconn on Tuesday, alleging that Foxconn had caused “irreparable harm” to the startup by not living up to its November deal to invest $170 million in LMC.
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“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,” LMC CEO and President Edward Hightower said, according to the press release. “We will vigorously pursue our litigation claims against Foxconn accordingly.”
Foxconn denied the allegations.
“LMC has continuously attempted to mislead the public and has been reluctant to perform the investment agreement between the two parties in accordance with its terms,” Foxconn said in a statement shared with the Daily Caller News Foundation. “Regarding LMC’s litigation announcement today and the false comments and malicious attacks made by LMC in its external statements against Foxconn, the Company reserves the right to pursue legal actions and also suspends subsequent good faith negotiations.”
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Foxconn, an international electronics manufacturer, was investigated by Apple in 2021, which resulted in a Foxconn iPhone factory in India being closed after finding substandard living conditions, including crowded barracks and food infested with worms, according to Reuters.
The Lordstown plant was previously owned by General Motors until it was closed in 2018, according to The Guardian. Former President Donald Trump praised the plant, saying he made a deal to keep the plant open under new ownership, according to White House documents.
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