Battery recycler Li-Cycle has filed for bankruptcy protection —acknowledging the company is “insolvent” and intent on selling the business.
The Toronto-based firm jointly filed for creditor protection in Canada and the United States, securing temporary stays on either side of the border. The move came two weeks to the day after the officials announced they were seeking a buyer in the hopes of staving off such action.
Li-Cycle was once the darling of local politicians, and a showcase for New York state's economic development efforts. Its massive hub facility at Eastman Business Park in Greece promised 250 jobs, and a cutting-edge process to strip core metals from used lithium-ion batteries for reuse in new batteries, including for electric vehicles.
But those same politicians were blindsided in Fall 2023, when construction abruptly halted, with company officials citing escalating costs. Li-Cycle has hemorrhaged money in the months since while trying to project optimism, land a federal loan and secure other outside investment.
In court filings Wednesday, the company acknowledged those efforts had failed.
"Despite conducting a broad canvas of the market with the assistance of investment bankers for over two years,” the company wrote, “Li-Cycle has been unable to execute a viable transaction to obtain sufficient additional investment.”
There is urgency here, with debts reaching into the tens of millions of dollars.
Li-Cycle says it is facing "a plethora of lawsuits, arbitrations and mediation proceedings in the United States that have fast-approaching deadlines.”
And the company fears its U.S. assets could be “picked off individually,” records show, with leases terminated and assets repossessed.
“The leases for at least seven of (Li-Cycle's) spoke, office, lab and warehouses properties allow the landlord to terminate a lease, re-enter the premises, and, in some cases even discard the Chapter 15 Debtors’ valuable property therein, within five to 10 days after failure to make a payment when due, and in some cases with no advance notice," according to the company's court filings. "At least one landlord has claimed that an event of default will occur on the US HubCo’s Rochester Hub warehouse by May 17, 2025.”
Chapter 15 differs from the more commonly known Chapter 11 bankruptcy as the former deals with cross-border insolvencies, while the latter is a purely domestic matter under which companies are permitted to reorganize and restructure debts.
“The Chapter 15 Debtors intend to conduct a sale and realization process to seek a sale of, or investment in, their businesses,” reads the company filings in U.S. bankruptcy court for the Southern District of New York. “The goal is to identify a transaction or investment that will allow the business to continue as a going concern, re-start operations at some or all of its paused spokes and resume construction of the Rochester Hub for the benefit of its employees, suppliers and the communities in which Li-Cycle operates.”
In a news release, Li-Cycle said it had entered into an equity and asset “stalking horse” purchase agreement with Glencore. The company's key investor agreed to a credit bid for at least $40 million for certain Li-Cycle subsidiaries and assets, including the Rochester hub project. A "stalking horse" agreement is a binding offer that sets the minimum bid price and deal terms.
Li-Cycle has retained William E. Aziz as chief restructuring officer to help guide the business through this process.
This is a developing story. Check back for updates.
