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Lordstown Motors’ Insurer Will Not Cover Losses From Pending Fraud Probes
Electric pickup designer warns its $32 million legal reserve may be too low and may go out of business.
November 7, 2022
Lordstown Motors (RIDE), an eclectic pickup truck designer, accrued $30 million related to shareholder litigation, DOJ inquiries, and SEC investigations. The latest accrual brings the nine month total to $32 million and comes nearly two years after the company was accused of faking pre-orders for its vehicles.
Even worse, Lordstown’s insurance company has turned its back on the company. In its latest quarterly filing, Lordstown revealed it had been notified by its insurer that:
“...no coverage is available for the consolidated securities class action, various shareholder derivative actions, the consolidated stockholder class action, various demands for inspection of books and records, the SEC investigation, and the investigation by the United States Attorney’s Office for the Southern District of New York described below…”
It’s not clear Lordstown’s accrual is large enough. Lordstown also inserted new language in the filing warning legal costs or adverse outcomes in excess of the accrual or not covered by insurance could put it out of business.
Related: FSR, GOEV, NKLA
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