Court to Rule on TuSimple Governance, Cash Pile Fate in Q1
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A Delaware court will decide the fate of around $450 million in cash and determine who holds voting rights to steer future decisions for onetime autonomous trucking pioneer TuSimple sometime in the first quarter of 2025, according to court and securities filings.
The Delaware Chancery Court ruled Dec. 13 that TuSimple co-founder and former CEO Xiaodi Hou’s challenge to board selections and governance changes had enough merit to win the court’s time. However, court Vice Chancellor Paul Fioravanti agreed with the company’s current management that its planned Dec. 20 annual meeting could proceed, including votes on proposed changes.
Should the court ultimately rule in Hou’s favor, Fioravanti said TuSimple must conduct a special meeting of shareholders to vote on whether to undo any governance changes agreed to at the Dec. 20 meeting.
Meantime, the court decreed that TuSimple must provide 10 business days’ advance written notice if it wants to transfer cash exceeding $15 million a month to its mainland China operations; seek approval of a merger or acquisition; or change shareholder voting rights.
Hou said that, if he wins, he will seek a vote to remove every director on TuSimple’s board except for Albert Schultz, the president of Kaerus Consulting, and then liquidate the company.
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TuSimple exited the U.S. autonomous trucking space in December 2023 after a series of layoffs and retrenchments, and now focuses on generative artificial intelligence applications in the animation and video game industries.
In April 2021, TuSimple raised $1.35 billion in an initial public offering. Some $450 million of the cash pile remains, according to Hou, who argues investors’ funds are set to be used for means other than they were intended. Hou is also seeking a ruling on whether he or one-time colleague Mo Chen controls 29.7% of TuSimple’s voting rights.
TuSimple in early December said it does not believe liquidation would realize the most value for shareholders. TuSimple CEO Cheng Lu told Transport Topics Dec. 17 that position remained unchanged.
TuSimple has maintained that the liquidation strategy is likely intended to insulate Hou and his latest autonomous trucking venture — Bot Auto — from litigation. In October, TuSimple filed suit in Texas Business Court alleging Hou misappropriated trade secrets related to the company’s sensor suite and perception technology, decision-making technology and automatic safety technology. TuSimple obtained a temporary restraining order against Bot Auto and awaits a ruling on a temporary injunction request.
Hou and the company’s board were engaged in a power struggle from late 2022 into 2023. He resigned from TuSimple for good in March 2023.
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Since then, Hou has raised $20 million in capital for Bot Auto. In September, he said the Houston-based company will operate a fleet of Level 4 autonomous trucks under a Transportation-as-a-Service model to freight customers. Autonomous vehicles are classified in levels 1 to 5. Level 4 does not require human interaction in most circumstances, but a driver can still manually override systems.
TuSimple, meanwhile, on Dec. 18 angled to leave its autonomous trucking past even further in the rearview mirror by rebranding as CreateAI.
“The rebranding reflects CreateAI’s renewed focus on transforming animation and video game industries through proprietary AI technologies and its integrated content development platform,” the company said.
CreateAI will have offices in the U.S., China and Japan, with initial plans to focus on martial arts and science fiction-based entertainment.
Prior to exiting the autonomous trucking space, TuSimple had formed a partnership with truck manufacturer Navistar, now known as International Motors. That deal was dissolved. Investors in the initiative included U.S. Xpress Enterprises and Werner Enterprises.
U.S. Xpress was acquired by Knight-Swift Transportation in a deal announced in March 2023. The combined entity ranks No. 7 on TT’s Top 100 list of the largest for-hire companies in North America. Werner ranks No. 16 on the for-hire TT100.
