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MONTREAL \u2014 The Quebec government wants a judge to declare insolvent the North American branch of Swedish battery manufacturer Northvolt, as the province attempts to recoup some of its losses on a failed electric-vehicle battery project.<\/p>\n
Documents filed in Quebec Superior Court on Tuesday say that Northvolt Batteries North America owes more than $260 million on a government loan that allowed the company to buy land near Montreal to build a $7-billion battery plant.\u00a0<\/p>\n
The government wants the court to launch creditor protection proceedings so that it can recover nearly $200 million from frozen bank accounts belonging to Northvolt and repossess the property where the factory was supposed to be built.\u00a0<\/p>\n
\u201cIt is clear that (Northvolt is) no longer able to continue its activities or complete the project in the short or medium term, meaning that they are clearly insolvent,\u201d the documents read.<\/p>\n
Quebec Economy Minister Christine Fr\u00e9chette announced Tuesday that the government was pulling the plug on the project and would provide no more public funding. The province has invested $510 million in Northvolt and originally pledged up to $2.9 billion in financing for the project.\u00a0<\/p>\n
The court documents also detail how the relationship between the Quebec government and Northvolt deteriorated in recent months, as the company struggled to chart a path forward.<\/p>\n
Northvolt announced plans to build an electric-vehicle battery \u201cgigafactory\u201d in Quebec in September 2023. At the time, it was hailed as the largest private investment in the province\u2019s history, but construction never got beyond preparatory work.<\/p>\n
The project\u2019s fate has been in doubt since Northvolt\u2019s Swedish parent company filed for bankruptcy in March. The Quebec government\u2019s $270-million investment in the parent company was lost, as was a $200-million investment from the province\u2019s pension fund manager, the Caisse de d\u00e9p\u00f4t et placement du Qu\u00e9bec.\u00a0<\/p>\n
The North American subsidiary attempted to find a buyer, but on Tuesday, Fr\u00e9chette said the company had not been able to come up with a satisfactory plan. Now, Quebec is trying to recoup a $240-million guaranteed loan issued in October 2023 to allow Northvolt to purchase the land for the plant. With interest, the debt is now worth more than $260 million, according to the court filing.\u00a0<\/p>\n
The government wants Northvolt declared insolvent so that it can withdraw $198 million from bank accounts belonging to the company, which were frozen by the government after the Swedish parent company declared bankruptcy. It also wants the court to authorize a process for the sale or repossession of the land.\u00a0<\/p>\n
Vivek Astvansh, a McGill University professor with expertise in bankruptcy proceedings, said the province is in a good position to recover the debt. He said the government would be first in line to recoup its loan in creditor protection proceedings. \u201cThe court will take the taxpayers\u2019 perspective,\u201d he said.<\/p>\n
The court documents detail how Northvolt agreed in 2023 to meet certain milestones by the end of June 2026, including the start of construction for the initial phase of the battery plant. \u201cIt is not anticipated or likely that these deadlines will be met,\u201d the filing says.\u00a0<\/p>\n
The government says the parent company\u2019s bankruptcy in March cast doubt on the North American subsidiary\u2019s ability to complete the project, \u201cwhich was also experiencing significant delays at that time and a virtually non-existent level of progress.\u201d<\/p>\n
Quebec signed a new agreement with the company in April to give Northvolt time to find new investors or buyers, which was later extended twice. Bidders had a Sept. 1 deadline to submit binding offers.\u00a0<\/p>\n
In August, American battery startup Lyten announced it was acquiring Northvolt\u2019s assets in Sweden and Germany and hoped to buy the Northvolt Six project in Quebec\u2019s Mont\u00e9r\u00e9gie region. The province claims that Northvolt agreed to negotiate exclusively with Lyten until Sept. 15, which it said violated its agreement with the company.<\/p>\n
On Aug. 31, the Quebec government refused a request from Northvolt for a third extension, concluding that the solicitation process \u201cis doomed to failure and has not generated a binding offer to ensure the continuity of the activities and the overall project, such that insolvency proceedings have become inevitable.\u201d<\/p>\n
The court documents say that any potential agreement between Northvolt and Lyten \u201csuffers from major uncertainties and cannot be considered a binding offer to envisage a viable transaction in the short or medium term.\u201d<\/p>\n
A spokesperson for Fr\u00e9chette said on Tuesday that Lyten wanted more government funding that Quebec was unwilling to offer. In a statement, Northvolt Batteries North America said it found Quebec\u2019s decision to stop funding the project \u201cregrettable,\u201d and said it had been in contact with potential buyers until this week.\u00a0<\/p>\n
A court hearing for the case has not yet been scheduled.<\/p>\n
\u00a92025 The Canadian Press<\/strong><\/p>\n<\/p><\/div>\n