Lordstown Motors disclosure statement draws objection; hearing moved

By Sarah Lizee

Olympia, Wash., Oct. 11 – Lordstown Motors Corp.’s disclosure statement for its Chapter 11 plan drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the court should not approve the disclosure statement unless the debtors change the plan’s third-party releases from opt-out to opt-in and modify the solicitation procedures accordingly.

“Releases by parties who fail to object or opt out are not consensual,” the U.S. trustee said in his objection.

“This issue should be addressed now, so that the ballots can incorporate any opt-in mechanism the court requires.”

Vara said it appears the debtors’ current directors would receive third-party releases under the plan, even though five of the nine current directors are defendants in pending shareholder derivative litigation.

The U.S. trustee said any such third-party releases should be consensual and should receive close scrutiny in light of the extensive prepetition litigation involving the debtors and their current and former directors and officers.

According to a notice filed Wednesday, the hearing on approval of the disclosure statement was moved to Oct. 25 from Oct. 18.

The Lordstown, Ohio-based electric vehicle maker filed Chapter 11 bankruptcy on June 27 under case number 23-10831.

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