Lordstown Motors amends plan ahead of disclosure statement hearing

By Sarah Lizee

Olympia, Wash., Oct. 24 – Lordstown Motors Corp. amended its Chapter 11 plan and related disclosure statement on Tuesday, according to an 8-K filed with the Securities and Exchange Commission.

Following the amendments, the plan does not include the subordination of the preferred and common equity interests in the company held by Foxconn, and those interests would remain in place.

Also, the amended plan now classifies all general unsecured claims in a single class and there will be no pool of cash to pay distributions to holders of general unsecured trade claims.

The plan now also provides for the resolution of (i) the Ohio securities class action, with holders of allowed claims in this class receiving class A common stock, unless the post effective date debtors’ elect to cash out those common stock interests, or the lead plaintiff may elect to receive a $1 million settlement on behalf of the plaintiffs to be distributed pro rata, and (ii) the “N.D. Ohio” action, with holders of allowed claims, if any, in this class receiving recoveries limited to the debtors’ insurance policies.

The disclosure statement hearing is still scheduled for Oct. 25.

As a reminder, the debtors filed their bankruptcy cases to sell their assets and prosecute their substantial claims against shareholder and former partner Foxconn, among other things.

Lordstown has started a court-approved process to market and sell the debtors’ assets and is working to resolve the material claims against the debtors. It has also filed a complaint against Foxconn in the bankruptcy court.

The plan provides for the liquidation of any assets remaining after the sale process, the continuation of the litigation against Foxconn, as well as any other causes of action of the debtors, the resolution of claims against the debtors, and for the distributions of the debtors’ cash, including proceeds generated from the sale of assets and the litigation against Foxconn, to holders of allowed claims and interests.

The plan also preserves the ability of the debtors to enter into one or more transactions after the effective date to monetize some of their tax attributes.

Under the plan, holders of administrative claims, professional fee claims, priority tax claims, class 1 other priority claims and class 2 secured claims will be paid in full.

Holders of class 3 general unsecured claims will receive a pro rata share of the debtors’ cash, without regard to the particular debtor against which the claims are allowed and excluding the post effective date debtor amount. Distributions will be received after higher priority claims are satisfied and professional fees are paid.

General unsecured creditors will receive post-petition interest at the federal judgment rate if the claims and interest will be satisfied in full. Otherwise, holders will receive their pro rata share of post-petition interest.

Foxconn preferred stock interests will be reinstated and unimpaired.

Intercompany interests will be reinstated and unimpaired, but no distribution will be paid until classes 1 through 3 are satisfied.

Interests in the debtors will be retained. Holders will only receive distributions from post-effective date debtor cash.

Section 510(b) claims and RIDE section 510(b) claims are impaired.

Holders of general unsecured claims, certain Foxconn preferred stock interests, common stock interests, section 510(b) claims and RIDE section 510(b) claims are entitled to vote on the plan.

The Lordstown, Ohio-based electric vehicle maker filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on June 27 under case number 23-10831.

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