The judge in Canoo’s bankruptcy case has blocked an attempt by a mysterious financier to disrupt the sale of the EV startup’s assets.
In a hearing Tuesday, Judge Brendan Linehan Shannon ruled the financier, a UK-based man named Charles Garson, lacked standing to request the sale to Canoo’s own CEO be vacated. While Garson had told the court he was willing to pay as much as $20 million for Canoo’s assets, he missed the deadline to formally submit that bid. Garson also never made it clear where he was sourcing that money from, causing the bankruptcy trustee in the case to raise concerns the bid could get blocked by the Committee on Foreign Investment in the United States.
The last remaining challenge to the asset sale comes from Harbinger Motors, a commercial electric trucking startup created by a handful of former Canoo employees. Harbinger objected to the sale before it was finalized in April. The judge denied Harbinger’s objection, but the company has since appealed that decision.
Jason Angelo, a lawyer for Garson, framed his client’s attempt to disrupt the sale as a “David versus Goliath type matter.” Angelo tried to make the case during the hearing that Garson’s conversations with the bankruptcy trustee — which were submitted to the court under seal — led him to believe he had until the end of April to formalize a bid. He also repeated the claims made in Garson’s original filing about the sale allegedly being unfair because the assets ultimately went to Canoo’s CEO Anthony Aquila.
“I think it would make sense here to allow a redo, so to speak,” Angelo said, citing “the sincerity and earnestness” of his client. “I know that is asking a lot, I do.”
Mark Felger, the lawyer representing the bankruptcy trustee, disagreed by saying there was little in dispute and the negotiations were fair.
“We think it’s pretty clear-cut in terms of the facts. There’s no he said, she said,” he told the judge. “Your Honor, it’s all in the emails. I’ve read them over many, many times. I don’t see any miscommunication. I don’t see any deception. It was clear how we were proceeding. He knew there was a sale hearing on the ninth, and he chose not to file anything.”
Regarding the fairness of the sale process, Felger said he and the trustee “were concerned about this insider sale [to the CEO].”
“But they’re the ones who stepped up, right and we negotiated hard. We went back and forth a dozen times on that agreement,” he said. Felger also repeated the trustee’s claims, made in earlier filings and testimony, that the cost of maintaining Canoo’s assets — especially its battery packs — was costing too much money. Letting a sale process drag out for too long could damage the value of the estate, he said.
Judge Shannon, after hearing the arguments from Angelo, Felger, and a lawyer for Aquila, ruled swiftly against Garson. He said the financier lacked standing to properly argue his motion to vacate the sale, since he is not owed any money by Canoo and did not submit a formal bid before the deadline.
“I am sympathetic to Mr. Garson’s frustration at what I sense and am satisfied is a genuine interest to provide a superior bid and purchase these assets,” Shannon said. “But it was a complex process run by the chapter seven trustee that I don’t think Mr. Garson had a full handle on exactly what the process was, and what was necessary in order to fully engage in that process.”
Shannon also pointed out it was made clear to the trustee from the beginning who Aquila was, and that his role as CEO alone did not preclude him from buying his company’s assets.
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