Lordstown Has To Face Trade Secret Theft Trial Despite Bankruptcy Filing

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Lordstown Motors is heading to trial to face allegations from Karma Automotive that it stole designs and technologies to develop the Endurance pickup truck. The trial will be held despite Lordstown recently filing for Chapter 11 bankruptcy.

Delaware bankruptcy judge Mary Walrath has expressed concern that Lordstown was attempting to sell itself before a trial could take place. Additionally, she was worried that Jefferies LLC, the investment bank that Lordstown retained to help sell its assets, was not informing potential bidders about its ownership dispute with Karma.

Read: Lordstown May Have Accidentally Sold Itself To Foxconn – At A Huge Discount

Karma Automotive, a small EV startup that we haven’t heard much about in the last 12 months, filed a lawsuit against Lordstown in 2022 claiming that it had poached key employees and lifted trade secrets to speed up development of the Endurance. Karma is seeking an eye-watering $913.2 million in damages as well as fees, costs, and additional penalties.

Auto News reports that Lordstown is denying the claims, saying it spent millions to independently develop the design and technology of the Endurance. It had argued that the Karma lawsuit should be paused so it could pursue a sale in Chapter 11.

Nevertheless, Judge Mary Walrath has permitted Karma to move forward with the upcoming trial, noting it will determine which company owns specific assets and could be the deciding factor in Lordstown receiving any offers to buy its assets. A verdict on the matter should be reached in September.

Lordstown Motors filed for Chapter 11 bankruptcy in late June while simultaneously issuing litigation against Hon Tao Technology Group and Foxconn, claiming that the Taiwanese giant had caused it material and irreparable harm by not living up to its commitments to help develop and manufacture the Endurance pickup truck.