Phoenix-based electric and hydrogen truck maker Nikola filed for bankrupcy in February.
A month later, founder and former CEO Trevor Milton, who had been convicted of securities fraud, received a pardon from the US President Donald Trump.
The full and unconditional presidential pardon overturned a four-year prison sentence, imposed in December 2023, for deceiving investors about the company’s progress and products.
As the company deals with the Chapter 11 plan in a Delaware bankrupcy court, Milton has argued that the plan does not fully reflect the presidential pardon he received, as he is asking for a $69 million indemnification in legal fees against Nikola, which the company pushed back.
Milton stepped down from CEO in 2020, after allegations from Hindenburg Research that accused him of repeatedly misrepresenting Nikola‘s technological capabilities.
According to Law360, Nikola said earlier this month that Milton’s demand is invalid, as the ex-executive acted in a “grossly negligent, reckless” behaviour, engaging in “bad faith actions” during his time at the company.
The report added that “Milton flagrantly breached his fiduciary duties, causing significant financial harm to the debtors and ultimately contributing significantly to its insolvency by causing an avalanche of litigation against the debtors and a massive SEC civil penalty.”
The legal fees refer to a 2021 arbitration case, where the arbitrator ruled that Milton was responsible for paying most of a $125 million fine imposed by the SEC on Nikola.
However, the former CEO argued on a filing this Wednesday that, since he received a pardon from Trump in March, he is now presumed innocent, and therefore his claim should not be subordinated.
“Because President Trump expressly decided here that Milton is factually innocent, the pardon did, contrary to the debtors’ assertions, wipe the slate clean,” the filing noted.
“At least to the point that debtors cannot rely in any way on the record of the now discredited federal criminal conviction to advance their equitable subordination against Milton,” it added.
The new filing also includes quotes from President Trump’s speech on March 28.
“I don’t know him, but I was… they say it was very unfair. And they say the thing that he did wrong was he was one of the first people that supported a gentleman named Donald Trump for president,” the President said then.
Both the President and Milton criticized the investigation and the federal prosecutors, who had accused Milton of taking on television and social media to lie about Nikola‘s progress towards zero-emission vehicles.
In May, Nikola‘s creditors committee asked the bankrupcy court to investigate whether Milton was dissipating personal assets that should be used to satisfy his debt to the company.
