A court hearing on the sale of bankrupt electric truck startup Nikola’s assets to Lucid Motors was going smoothly on Friday. No objections had been filed to the transaction, and Delaware bankruptcy Judge Thomas Horan verbally approved it without hesitation.
Until, that is, a lawyer piped up on the Zoom call towards the end of the hearing.
The lawyer said his client “has some concerns” about the way the auction process was run. Those could be addressed at a later date, he said, but he stressed he didn’t want his client’s silence to “be held against us in the future.”
The lawyer was representing ISSO LLC, an entity that Nikola’s founder Trevor Milton has been using to evaluate a bid for his former company’s assets. As part of that process, he was already barred by Nikola from touring its Arizona factory — a decision that Judge Horan stood by last week.
While the approval of the sale to Lucid was breezy, the late appearance by Milton’s representative was an ominous sign that he is not done poking at his former company.
Fresh off a pardon from President Donald Trump, which helped him avoid serving a four-year prison sentence, it’s possible that Milton could try to fight a $168 million arbitration award he was ordered to pay Nikola last year.
That arbitration award remains a key component of Nikola’s Chapter 11 bankruptcy case. Ahead of the bankruptcy, Nikola was able to settle a class action lawsuit by shareholders related to the false claims Milton made while serving as CEO of the company. But it was able to do so by promising to distribute that arbitration award to those shareholders.
Nikola also still has some assets it hopes to sell following the Lucid transaction. Lucid purchased the Coolidge, Arizona factory and the Phoenix headquarters lease, plus manufacturing equipment. It will also hire 300 or so Nikola employees. But Nikola is still holding onto its inventory of hydrogen-powered big rigs and other assorted equipment.
Joshua Morris, a lawyer for Nikola, said in the hearing he was not surprised ISSO and Milton “would want to try and taint these proceedings.”
“This is a pattern of behavior that we’ve seen over and over,” Morris said. “We believe these are baseless assertions. When asked for any evidence or any specificity, none was provided. We think your honor should view these with a jaundiced eye.”
Morris went on to say that he believes Milton’s participation in the sale process appears to be “an attempt to continue to harm the company for a benefit that I can’t quite ascertain.”
He added that Milton may be casting a pall on the sale process in hopes of impacting that arbitration award.
“Perhaps the play is to render [Nikola] desperate for support cash so that the committee [of unsecured creditors] forces the debtor to attempt or accept some low ball settlement proposal,” he said. “We just know that we believe we ran the sale process with an openness and involved all parties.”
The lawyers left things there and let the hearing come to a close. A spokesperson for Milton did not immediately respond to a request for comment.
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