Varennes Cellulosic Ethanol LP and 7037163 Canada Inc. dba Recyclage Carbone Varennes, CCAA

Varennes Cellulosic Ethanol LP and 7037163 Canada Inc. dba Recyclage Carbone Varennes, a Varennes, Québec-based green energy supplier, obtained CCAA protection on March 11.

The company was established to oversee the financing, construction and management of an approximately $1.5 billion project consisting of a biofuels plant (which is about 75% complete) and an electrolyzer plant (which is about 45% complete).

The company relies on government subsidies, debt financing from its secured creditors (Canada Infrastructure Bank and an IQ Financing subsidiary), as well as periodic investments from its limited partners (Proman Services Canada, Shell Canada, an IQ Equity subsidiary and Suncor Energy).

The company has been faced with increasingly difficult financial challenges, including cost overruns of approximately $180 million, as well as short-term funding gaps resulting from a disagreement with limited partner Proman, which has indicated it will not fund any of its remaining committed capital ($88 million). Proman has commenced arbitration proceedings against the company seeking to declare a December 2024 capital call invalid on the basis that the company was subject to an insolvency event at the time of the call, and the company has counterclaimed.

The purpose of the CCAA proceedings is to conduct a SISP. Barclays Capital, which conducted a pre-filing strategic process, has been engaged as financial advisor. 

EY is the monitor.

Counsel is Stikeman Elliott for the company, Fasken for the monitor, McCarthy Tétrault for IQ, Davies for RBC, Lavery for Groupe Promec, Osler for Proman, and Langlois for Hydro Québec.