Li-Cycle, the Toronto-based lithium-ion battery recycler, has been granted creditor protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) amid ongoing financial distress and restructuring efforts.

Its U.S. affiliates have also filed for Chapter 15 bankruptcy in New York, seeking recognition of the Canadian proceedings as a “foreign main proceeding.” The filings grant the company a stay of creditor claims and legal actions in both countries as it explores strategic alternatives.

As part of the court-supervised CCAA process, Li-Cycle intends to launch a formal sale and investment solicitation process (SISP) to pursue potential buyers or partners for parts or all of its business.

To support continued operations during the restructuring, Li-Cycle has secured a debtor-in-possession (DIP) financing term sheet with Glencore, its largest secured creditor, for up to $10.5 million. These funds will help maintain operations, particularly at its Germany Spoke, and finance the ongoing restructuring.

Li-Cycle has also entered into a stalking horse purchase agreement with Glencore, valued at a minimum of $40 million. The proposed deal includes a bid for key assets—such as its Spokes in Arizona, Alabama, and New York, the Germany Spoke, its Rochester Hub project, and intellectual property—along with certain assumed liabilities. This agreement sets the baseline for other bids in the SISP.

The Germany spoke is expected to remain operational with sufficient working capital, including through the DIP facility. Meanwhile, the company is winding down several European and Asian subsidiaries, retaining only its operating businesses in Switzerland and Germany.

Li-Cycle recently launched a strategic review process designed to result in a sale, merger, or other business combination, citing severe liquidity issues and an uncertain ability to meet financial obligations.

The company also recently announced the departure of its CFO Debbie Simpson. Eric Riddle, previously vice-president and group controller at Carpenter Technology, has been appointed interim CFO.

The leadership changes followed the exit of co-founder and CEO Ajay Kochhar, with executive chair and fellow co-founder Tim Johnston stepping in as interim CEO. The company also began a major operational restructuring, including job cuts and cost-saving initiatives intended to help avoid bankruptcy.

Li-Cycle had previously paused construction of its Rochester, N.Y., hub after costs soared to an estimated US$1 billion—more than double initial projections.

Toronto-based Alvarez & Marsal has been appointed by an Ontario court to monitor the CCAA proceedings. According to an Alvarez & Marsal court filing, Li-Cycle had US$205.6 million in outstanding secured debt.

Pictured: Paused Li-Cycle hub development project in Rochester, N.W.

Photo: Pike Conductor

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