Lightning eMotors assets to be sold, receiver appointed

LOVELAND — Assets of Loveland-based electric-vehicle company Lightning eMotors Inc. and its subsidiary, Lightning Systems Inc., will be sold, with proceeds going to creditors, according to a filing the company made with the Securities and Exchange Commission Thursday.

The filing came one day after Cupola Infrastructure Income Fund LLLP filed suit in Larimer County District Court seeking appointment of a receiver to sell the company’s assets. Lightning said in its SEC filing that it “stipulated and agreed to the motion and proposed order to appoint Cordes and Company as the receiver.

Lightning, which manufactures light delivery vehicles and passenger buses, is located in The Forge campus, which was formerly the Hewlett-Packard Co. facility in Loveland.

“Upon appointment of the receiver, the receiver will have and exercise the powers and authority of the company’s directors and officers, take possession of, and protect and preserve, all of the assets of the company, and administer the estate in accordance with Rule 66 of the Colorado Rules of Civil Procedure,” Lightning said in its filing. “Accordingly, the receiver will sell all of the assets of the company (together or separately) and distribute the proceeds of such sale to the company’s creditors in a manner approved by the court. The appointment of a receiver is considered an event of default under the company’s senior notes and other financing arrangements.”

Cupola’s filing with Larimer County District Court listed several instances of default by Lightning. Cupola had provided a $3 million working-capital line of credit, as well as a $3 million term loan to Lightning in October 2019, with the loan agreements amended in 2021 and 2023.

“Defendants are in default under the Loan Agreement and Defendants do not contest such defaults,” Cupola stated in its filing.

Cupola and Lightning entered into a forbearance agreement In November, but the forbearance agreement was terminated Dec. 12.

Lightning also is in default on $100 million in convertible notes held by Wilmington Trust NA. The notes have a maturity date of May 15, 2024. Lightning “did not pay the semi-annual interest payment for the period ending November 15, 2023, and (Lightning) has informed Plaintiff that it will not make this interest payment on December 15, 2023 — the date ending the grace period by when the interest payment must be paid …,” according to the court filing.

Lightning was delisted from the New York Stock Exchange in October due to its stock price falling below $1 per share and not meeting the NYSE requirement of global market capitalization of at least $15 million.

“The NYSE’s delisting has had a significant impact on Defendants’ ability to raise capital to fund operations and pay debts as they come due,” Cupola stated in its court filing. “In addition, the delisting will require the Company to offer to repurchase Convertible Notes at par value and the Company does not have the funds to complete the repurchase. The inability to complete such repurchase is a default under the Note Agreement.”

Lightning warned in an SEC filing in November that it might be forced to file bankruptcy or otherwise liquidate.

“The continuation of the company as a going concern is dependent upon the company attaining and maintaining profitable operations and/or raising additional capital from equity offerings, debt financings or other capital markets transactions, collaborations, strategic partnerships or licensing arrangements, all of which may be impacted by our ability to fund operations in the short term,” the company wrote in its third-quarter earnings report. “Furthermore, if we are unable to obtain the necessary funding and/or complete a strategic transaction, we could be required to liquidate inventory, cease or curtail operations, or seek protection under applicable bankruptcy laws or similar state proceedings.”

The company has struggled with supply-chain issues related to failure of Romeo Systems Inc. to supply batteries under terms of a long-term supply agreement. Lightning sued Romeo and its parent, Nikola Motor Co., in March, alleging financial harm due to supply curtailment.

Lightning has lost $229.3 million over the past four years. The company employed 269 workers as of Feb. 28, 2023.

The case is Cupola Infrastructure Income Fund LLLP v. Lightning eMotors Inc. and Lightning Systems Inc., Case No. 2023CV31015.

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