Lordstown Motors (OTC:RIDEQ) revealed Tuesday that the recently bankrupt automaker had reached a $40-million settlement with Karma Automotive over a 2020 lawsuit. The electric vehicle company had been accused of stealing proprietary technology.
The settlement, currently awaiting approval from the bankruptcy court, encompasses a payment of $5M designated as a royalty for the utilization of Karma's intellectual property – technology that Lordstown was accused of wrongfully appropriating.
Karma Automotive, headquartered in California, initiated a lawsuit against Lordstown, alleging the recruitment of its staff and the misappropriation of technology utilized in vehicle infotainment systems. The trial for this matter was originally set for September but was halted due to Lordstown's bankruptcy.
In June, Lordstown sought bankruptcy protection and initiated its sale process after failing to resolve a disagreement concerning an expected investment from Taiwan's Foxconn (TW:2354).
As stated in a submission, the creditors of Lordstown have urged the bankruptcy court to approve the settlement by August 28, although a hearing date has yet to be arranged.
Should the settlement not receive approval, and the case proceeds to trial, Lordstown will persist in its defense against Karma's allegations, as outlined in the submission.
Shares of RIDE were delisted from the Nasdaq on July 7th and moved to the over-the-counter (OTC) market.