Lordstown Motors had successfully negotiated a US$ 40 million settlement with Karma Automotive, says a noteworthy statement. This decision is the result of a lawsuit filed in 2020 by Karma Automotive, a company that is currently bankrupt, accusing the electric vehicle company of stealing intellectual property. This agreement requires payment of US$ 5 million, subject to bankruptcy court approval, as compensation for the use of Karma’s exclusive technology, which Lordstown was accused of stealing.
Karma Automotive, a plaintiff in this case with its headquarters in California, filed a lawsuit against Lordstown, alleging expropriation of labor and intellectual property primarily related to in-car entertainment systems. The legal processes were about to begin the trial phase, which was due to begin in September, but Lordstown’s bankruptcy forced a postponement.
An unbridgeable difference regarding a promised financial infusion from Foxconn of Taiwan, a well-known manufacturer of iPhones, confronts Lordstown, a company known for producing electric vehicles. As a result, Lordstown made the decision to declare bankruptcy in June and started making efforts to dispose of itself.
The bankruptcy court has been formally petitioned by Lordstown’s creditors to approve the settlement’s terms by or before August 28. The scheduling of a hearing for this subject is still awaiting confirmation, nevertheless.
Even though the agreed-upon settlement’s amount is significantly less than Karma’s first claim, which topped US$ 900 million, it nevertheless guarantees Karma will be compensated despite Lordstown’s financial collapse. Lordstown maintains that it disputes Karma’s claims, but argues that reaching a settlement out of court was necessary to avoid the delay and expense that come with a jury trial. It said that such a trial would have significantly hampered the current sale process and maybe discouraged potential buyers.