Nikola Corp.’s Chapter 11 plan has officially cleared the runway. A Delaware bankruptcy judge on Friday approved the electric truck maker’s restructuring strategy, brushing aside a dramatic objection from its ousted founder and former CEO Trevor Milton — even after a presidential pardon entered the mix.

U.S. Bankruptcy Judge Thomas M. Horan, ruling from Wilmington, declared that Milton’s argument — that a pardon from former President Donald Trump should shield him from financial fallout — was legally flimsy. The ex-CEO, convicted of securities fraud for exaggerating Nikola’s technology, insisted the pardon established his innocence. The judge disagreed.

Milton’s Objection Falls Flat

Milton opposed the plan because it subordinates his claims for legal fee reimbursements behind other unsecured creditors. He argued that since Trump pardoned him and publicly stated he believed Milton “did nothing wrong,” Nikola had no grounds to push his claims down the ladder.

But Judge Horan was unpersuaded.
“I’m not going to consider any out-of-court statements the president made when his words were perfectly direct and clear and stated exactly what his intentions were,” the judge said, stressing that the pardon language itself offered no basis to rewrite history.

Bankruptcy Tied to Recalls and Penalties

Nikola filed for Chapter 11 protection in February after a costly 2023 battery recall sent the company spiraling. The Securities and Exchange Commission had also leveled a $125 million penalty against Nikola over Milton’s misstatements about its ability to deliver electric and hydrogen trucks.

The SEC had initially fought the plan because $83 million of that penalty was being pushed behind other creditors. But a last-minute settlement eased tensions. Under the deal, the SEC will keep a $43 million unsecured claim, receive $4 million in cash, and accept a $40 million subordinated claim — waiving the rest.

Other Objections Overruled

The U.S. Trustee’s Office also tried to challenge the plan, zeroing in on opt-out release provisions, a hot topic since the Supreme Court’s Purdue Pharma ruling. Judge Horan, however, found the releases were consensual and legally sound.

Counsel in the Case

Nikola was represented by Potter Anderson & Corroon LLP and Pillsbury Winthrop Shaw Pittman LLP. Milton’s legal team came from Lewis Brisbois Bisgaard & Smith LLP. The SEC was represented in-house by its attorneys.

With the court’s sign-off, Nikola’s plan shifts into execution mode, marking a pivotal moment for the once high-flying electric truck maker now navigating bankruptcy with regulators, creditors, and its pardoned — but still sidelined — founder in the rearview.