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.
