Canoo's CEO Anthony Aquila is buying nearly all of the bankrupt electric vehicle startup's assets for $4 million in cash, according to a recent court filing. The sale will also wipe clean a more-than-$11 million debt Canoo owed to a financial firm run by Aquila, which loaned money to the startup during its final months.

The sale proposal comes just six weeks after Canoo filed for a Chapter 7 bankruptcy liquidation in Delaware and wound down its business. The startup, which went public in 2020 as part of a merger with a special purpose acquisition company, never sold more than a handful of its electric vans to government entities like NASA, the United States Postal Service, and the Department of Defense, before it failed.

According to the court filing, Canoo has around $145 million in assets and $175 million in liabilities, and around $12 million in cash and equivalents, as of February 24. Other interested parties can submit "higher and better offers" for the company's assets before a deadline of March 28.

The bankruptcy trustee has written in the filing that the "best course of action" would be to proceed with the sale to Aquila. The trustee cited a number of reasons for this, including a "lack of financing currently available" to support EV manufacturing. He also noted that the failure of other EV startups (like Fisker and Nikola) has produced a "glut of EV related assets" that are available "at fire-sale prices." Additionally, Canoo's estate doesn't have the money to cover "rents, security costs, and insurance necessary to maintain the integrity of the assets."

If the sale goes through, Aquila's new entity, WHS Energy Solutions, Inc., created in Delaware, will receive Canoo's manufacturing equipment, completed vehicles, intellectual property, contracts, and other inventory and assets. WHS Energy Solutions is not taking over any of Canoo's leases, and will not be responsible for any of the claims other creditors have against Canoo's estate.

Aquila has stated that a "principal motivation" for buying the assets is his "desire to honor [Canoo's] commitment to provide service and support for certain government programs." The CEO believes that unless he can assure the government agencies that he can continue to provide the services and support provided by Canoo, the programs will be materially delayed and the government will have to begin the time-consuming process of seeking and qualifying other contractors.

It's worth noting that CEOs or founders trying to buy up the assets of their bankrupt startups is not uncommon, even in the world of electric vehicles. In 2023, the former CEO of bankrupt EV startup Lordstown Motors purchased most of its assets and started a new company called LandX Motors. However, more often than not, the assets get sold to other companies or auctioned off in pieces.

It remains unclear what Aquila plans to do with Canoo's assets if he is successful in completing the transaction. The Canoo CEO did not respond to a request for comment. Only Aquila's financial firm and related entities held "secured" claims, meaning their debt was backed by collateral pledged by Canoo. The debts owed to its many other creditors — which include automotive supplier Magna (owed nearly $3 million), and financial advisors Yorkville (which sold millions of shares of Canoo stock and are owed $7 million) are behind Aquila's in line to get paid back.

The sale of Canoo's assets to its CEO raises questions about the future of the company and its government contracts. Will Aquila be able to revive Canoo's business and fulfill its commitments to government agencies? Only time will tell. One thing is certain, however: the electric vehicle industry is rapidly evolving, and the fate of Canoo serves as a reminder of the challenges and uncertainties that startups in this space face.