Li-Cycle Corp. et al., CCAA

Li-Cycle Corp. et al., the North American arm of the Li-Cycle Group, a global lithium-ion battery resource recovery company headquartered in Toronto, Ontario, obtained CCAA protection on May 14 listing approximately US$860.8 million in liabilities, including US$327.5 million to Glencore Ltd. and Glencore Canada Corporation. 

Li-Cycle has faced numerous challenges since the fall of 2023, including substantial cost overruns in completing construction at its planned “Hub” in Rochester, New York. This led to the commencement of class action claims in New York and Ontario and the filing of various mechanics’ liens against the Rochester Hub property. 

Li-Cycle secured $475 million in financing from the United States Department of Energy, but no amounts have been advanced to date due to a condition precedent requiring Li-Cycle to secure additional investment of $262.7 million before any advance is made.

Despite conducting a lengthy pre-filing sale process, Li-Cycle has been unable to execute a viable transaction or obtain sufficient additional investment. Moreover, the share price for parent company Li-Cycle Holdings Corp. — a public company that until recently was listed on the New York Stock Exchange — has dropped more than 99%.

As a result of these challenging circumstances, Li-Cycle has paused operations at its operating “Spokes”, paused construction on the Rochester Hub and reduced headcount by over 75%. Despite this, the company has limited remaining cash, and waivers on its unsecured and secured notes have now expired.

The CCAA proceedings are being commenced as part of a larger coordinated restructuring of the Li-Cycle Group (including its Asian and European operations). The principal purpose of the CCAA proceedings is to conduct a SISP with Glencore acting as stalking horse bidder and providing a DIP loan. Chapter 15 recognition has also been sought in the US.

A&M is the monitor. William Aziz of BlueTree Advisors is the CRO and Michelle Faysal is the CFO.

Counsel is McCarthy Tétrault / Freshfields for Li-Cycle, Osler / Skadden Arps for the monitor, Torys / Weil, Gotshal for Glencore, Stikeman Elliott for the Special Committee, Berger Montague for certain investors, Jones Day for Koch Strategic Platforms, White & Case for the United States Department of Energy and Greenberg Traurig for Citibank as collateral agent.