The Lion Electric Company (TSX:LEV) and its subsidiaries obtained CCAA protection on December 18, listing approximately $500 million in consolidated debt.

Lion Electric is a manufacturer of zero-emission vehicles and all-electric medium and heavy-duty urban vehicles, including all electric school buses.

Lion Electric employs approximately 300 employees after it temporarily laid off 400 employees and paused production at its Illinois plant while alternatives were being explored.

The CCAA proceedings were initiated further to the maturity of Lion Electric’s loan agreement with Finalta Capital Fund, L.P. and a subsidiary of Caisse de dépôt et placement du Quebec, together with the expiry of covenant relief under Lion Electric’s revolving credit agreement with a syndicate of lenders represented by National Bank of Canada, Bank of Montreal and Federation des Caisses Desjardins du Québec.

In recent years, in order to fund its operations and ensure that enough cash was available on hand, Lion Electric has had to resort to long-term debt financing and equity investments. However, it experienced a decrease in product deliveries due in part to the challenges in the processing of governmental subsidies and incentives, as well as the volatility of the EV market, which adversely impacted its revenues and cash flows.

Lion Electric has implemented various workforce reductions and other cost-cutting measures over the past several months, which has negatively impacted production cadence and vehicle deliveries and, ultimately, revenues and cash flows.

Given the amount of capital required to operate its business, as well as its significant debt-load and cash burn rate, the Lion Group has never achieved profitability or positive cash flows.

The purpose of the CCAA proceedings is to implement a SISP. Lion Electric also intends to seek recognition of the CCAA proceedings under Chapter 15 of the US Bankruptcy Code.

Deloitte is the monitor.

Counsel is Stikeman Elliott for Lion Electric, Lavery de Billy for the monitor, Norton Rose Fulbright for CDPQ-Finalta, Fasken for the Syndicate, and McCarthy Tétrault for Groupe Mach inc and Fondation Mirella & Lino Saputo.