Li-Cycle Holdings Corp., a leading global lithium-ion battery resource recovery company, announced that it and its North American subsidiaries have obtained creditor protection from the Ontario Superior Court of Justice under Canada’s Companies’ Creditors Arrangement Act (CCAA). The court order includes a stay of proceedings for the Li-Cycle Group until May 22, 2025, and appoints Alvarez & Marsal Canada Inc. as the monitor to oversee the company’s restructuring efforts and report to the court.
Simultaneously, Li-Cycle’s U.S. subsidiaries, including Li-Cycle Inc. and Li-Cycle North America Hub, Inc., have initiated proceedings in the United States Bankruptcy Court for the Southern District of New York under Chapter 15 of the U.S. Bankruptcy Code. This move seeks recognition of the CCAA proceedings as a “foreign main proceeding”, resulting in a broad stay that prevents legal actions, enforcement of remedies, and attempts to control or possess U.S. properties of the subsidiaries during the Stay Period.
As part of the restructuring under CCAA, the Li-Cycle Group plans to conduct a court-supervised sale and investment solicitation process (SISP) to continue seeking potential buyers for its business or assets. The company has entered into a term sheet with an affiliate of Glencore Canada Corporation, its largest secured creditor, for a debtor-in-possession (DIP) financing facility of up to $10.5 million. This financing is intended to support working capital needs and implement the restructuring plan. Additionally, Li-Cycle has established an equity and asset purchase agreement, known as a “stalking horse” agreement, with Glencore for at least $40 million. This agreement covers certain subsidiaries and assets, including Li-Cycle’s Spokes in Arizona, Alabama, and New York, as well as the Rochester Hub project, and includes the assumption of specific liabilities.
The company’s German subsidiary is expected to maintain sufficient working capital, supported by the DIP Facility, to continue operations during the CCAA proceedings. Li-Cycle is also working to wind down certain European subsidiaries, excluding its operations in Switzerland and Germany. The Company will also be winding down its subsidiaries in Asia.
The CCAA proceedings have led to an event of default under Li-Cycle’s loan agreement with the U.S. Department of Energy (DOE). The company has not drawn any funds from the DOE loan facility due to unmet conditions precedent for the first advance, and similar default events have occurred under the company’s convertible notes held by Glencore and Wood River Capital, LLC.
The Board of Directors has initiated these restructuring actions to ensure the continuation of day-to-day operations under the monitor’s oversight. At the upcoming “comeback” hearing on May 22, 2025, the Li-Cycle Group intends to seek approval for the DIP Facility, the SISP, and the Stalking Horse Agreement. Additional information regarding the CCAA proceedings is available on the monitor’s website.
Source: Business Wire
