What you need to know:
- A Delaware bankruptcy court has officially confirmed Nikola Corporation's Chapter 11 Plan of Liquidation, allowing the company to proceed with asset liquidation and creditor payments.
- The court reclassified the SEC’s $83 million claim, allowing only $43 million as a general unsecured claim, with a $4 million cash payout. The remaining $40 million was subordinated to lower priority.
- The plan resolves major objections filed by the SEC, U.S. Department of Justice, Mitsubishi, and the Texas Comptroller, clearing the path for final implementation.
- The court subordinated Trevor Milton’s $69.8 million creditor claim, citing his inequitable conduct including fraud and fiduciary breaches confirmed in prior criminal and arbitration proceedings.
A court hearing was held on September 5 at the U.S. Bankruptcy Court District of Delaware for the purpose of approving the Chapter 11 Bankruptcy Plan of Liquidation for Nikola Corporation along with its affiliated debtors.
The hearing was held in response to the SEC's August 26 objection, which argued that Nikola's plan seeks to reclassify the agency's $82 million civil penalty claim to a lower priority, potentially leaving more funds for unsecured creditors.
In essence, the debtors sought to treat the claim as one for damages—a classification the SEC firmly disputed.
The Bankruptcy Plan
Nikola's bankruptcy plan outlines a process to liquidate its remaining assets, resolve outstanding claims, and distribute proceeds to creditors. A key part is the establishment of a liquidating trust, which will pursue and monetize any remaining assets, including preserved estate claims. The plan also facilitates the settlement of derivative actions, with final court approval expected by November 22.
As part of the wind-down, Nikola will continue closing out its remaining operations.
Under the plan, administrative and priority claims will be paid in full in cash on the effective date. General unsecured creditors are expected to recover between 20.7% and 75.3%, according to the liquidation analysis. The plan also resolves several outstanding objections, including those filed by the SEC, Mitsubishi, the Texas Comptroller, and the U.S. Department of Justice.
In a key part of the settlement, the SEC's $83 million civil penalty claim will be split: $43 million will be treated as a general unsecured claim, with a $4 million cash payout. The remaining $40 million will be classified as junior in priority.
The court confirmed Nikola's second amended liquidation plan, which includes updates to the financial analysis and other provisions. These measures aim to ensure an orderly wind-down of Nikola and the fair distribution of its assets to stakeholders.
Trevor Milton strikes out (again)
Nikola founder and former CEO Trevor Milton, who is also a convicted felon but was pardoned by President Trump last March, attended the hearing though he did not testify. He objected, however, to having his $69.8 million creditor claim subordinated—a sum he says was spent on legal bills—though he provided no clear evidence to support the claim, aside from some heavily redacted invoices.
Milton also requested to testify about his innocence, but the judge denied this, stating it was irrelevant since the arbitration award had already been appealed and could not be relitigated.
Now a free man, Milton recently made an unsuccessful bid at auction to acquire his former company's assets, including intellectual property, unsold trucks, and related materials. Luxury EV manufacturer Lucid Motors acquired Nikola's Coolidge, Arizona manufacturing facility last April. Milton reportedly also made an unsuccessful bid for the facility.
Hearing outcome
As expected, the court confirmed Nikola's Chapter 11 liquidation plan as explained above.
One of the most notable rulings was the equitable subordination of Milton's $69.8 million claim. The court determined that he engaged in inequitable conduct, including breaches of fiduciary duty and fraud. These findings were previously established in both arbitration and criminal proceedings.
The court also overruled several objections to the plan, including those from the U.S. Trustee, lead class plaintiffs, and equity holders. It found the plan, including its third-party release provisions, to be fair and consistent with the requirements of the Bankruptcy Code.
Arguments suggesting that Milton's presidential pardon should negate prior findings of misconduct were also rejected. The court emphasized that a presidential pardon does not erase judicial or arbitral determinations of guilt or liability.
In addition, the court approved the disclosure statement on a final basis, concluding that it satisfies the requirements outlined in the Bankruptcy Code.
Finally, the court stressed the importance of efficiently resolving outstanding claims and objections in order to avoid delays and ensure an orderly liquidation process.
A November 22, 2025 hearing has been scheduled to finalize the winding down of Nikola's remaining operations.
