Just weeks after electric vehicle startup Canoo declared Chapter 7 bankruptcy, a surprising turn of events has emerged. Anthony Aquila, Canoo’s CEO, is set to acquire substantially all of the defunct company’s assets. This move, orchestrated through a newly formed entity, WHS Energy Solutions, Inc., signals a potential lifeline for Canoo Ev and raises questions about the future of the brand.
According to court filings, Aquila’s entity has offered $4 million in cash to purchase Canoo’s assets. This acquisition will also resolve a significant debt of over $11 million that Canoo owed to a financial firm managed by Aquila himself. This debt originated from loans provided during Canoo’s financially strained final months.
Canoo’s journey has been turbulent. Going public in 2020 via a special purpose acquisition company (SPAC) merger, the company struggled to gain traction in the competitive EV market. Prior to its bankruptcy filing in Delaware, Canoo managed to deliver only a limited number of its distinctive electric vans to government bodies, including NASA, the United States Postal Service, and the Department of Defense.
The bankruptcy filing revealed Canoo’s precarious financial state. As of February 24th, the company reported approximately $145 million in assets against $175 million in liabilities, with a mere $12 million in cash and equivalents. While the court has set a deadline of March 28th for other parties to submit higher bids, the bankruptcy trustee has recommended accepting Aquila’s offer as the “best course of action.”
Several factors underpin the trustee’s recommendation. The current economic climate presents a “lack of financing currently available” for EV manufacturing ventures. Furthermore, the failures of other EV startups have led to a “glut of EV related assets” available at significantly reduced prices. The trustee also highlighted that Canoo’s estate lacks the necessary funds to maintain the assets’ integrity, covering essential costs like rent, security, and insurance.
If the sale proceeds as planned, WHS Energy Solutions will inherit a comprehensive array of Canoo’s resources. This includes manufacturing equipment, completed vehicles, intellectual property, contracts, and various inventory and assets. Crucially, WHS Energy Solutions will not assume Canoo’s existing leases or liabilities to other creditors.
Aquila has stated that his primary motivation for this acquisition stems from a “desire to honor [Canoo’s] commitment to provide service and support for certain government programs.” The bankruptcy trustee’s filing further elaborates on this, noting that government agencies have expressed concern that program delays would ensue if continued service and support from Canoo could not be promptly assured.
The scenario of a CEO acquiring assets from their bankrupt startup is not unprecedented in the EV sector. Notably, the former CEO of Lordstown Motors undertook a similar maneuver in 2023. However, it’s more common for assets to be dispersed through auctions or sold to other companies.
The future intentions for Canoo EV’s assets under Aquila’s control remain unclear. Aquila has not yet publicly commented on his specific plans post-acquisition. Among Canoo’s creditors, only Aquila’s financial firm and related entities held “secured” claims, positioning them favorably for repayment. Other creditors, including automotive supplier Magna and financial advisors Yorkville, hold unsecured claims and are lower in the repayment priority.
