Construction has come to a halt on the Recyclage Carbone Varennes (RCV) biomethanol plant development as the company seeks creditor protection, according to multiple reports.

The company has been unable to secure the funds needed to complete the $1.5-billion project located in the Montreal suburb of Varennes, Que., according to La Presse and Le Devoir.

RCV is now asking the Superior Court for protection under the Companies’ Creditors Arrangement Act (CCAA) and approval to seek potential buyers or investors, the reports state. According to Le Devoir, Ernst & Young, which now goes by EY, is serving as the controller in the case.

The project’s financial troubles could cost taxpayers hundreds of millions of dollars, with the company already accumulating $280 million in debt to the Canada Infrastructure Bank (CIB) and the Quebec government. The Legault government also faces a potential loss of $117 million in company shares, while $114 million in combined federal and provincial subsidies could also be lost.

The Quebec government had not yet commented on the situation, despite the significant public investment involved, La Presse reported.

The RCV construction site includes a biofuel plant that is 75% complete, and a hydrogen electrolyzer, 45% built.

In its English-language court filing, the company describes itself as being in a “precarious and difficult position” due to a “lack of liquidity,” “cost overruns,” and “volatility in the biofuel market,” according to La Presse.

RCV is owned by Shell Canada, Suncor Energy, the Quebec government, and Proman, a Swiss-based methanol and natural gas derivatives producer. According to RCV’s court filing, Proman failed to honour a $16.3-million capital call in December, which was meant to keep the project moving forward. In response, Quebec and the CIB declined to provide RCV with additional loans totalling $22.5 million. Only Suncor contributed its $14-million share of the requested $69 million.

At a court hearing on Tuesday, Proman’s lawyer, Jack Little, denied any responsibility for RCV’s insolvency, arguing the company was already facing a “significant cash shortfall” months before the missed December capital call, according to La Presse

RCV’s financial difficulties go beyond the immediate funding gap. The company acknowledges cost overruns of $200 million, with the long-term funding shortfall expected to reach $318 million. Facing mounting financial challenges, RCV is requesting court approval to borrow another $33 million from Quebec and the CIB as interim financing.

The company has also taken legal action against Proman through the Arbitration and Mediation Institute of Canada, seeking to enforce its financial commitments.

With the project now stalled, the number of workers on-site has dropped from 250 to about 30, La Presse reported. General contractor Promec, which replaced Black & McDonald in January, has suspended its work while awaiting payment.

Promec has registered legal construction mortgages on RCV property totalling $21 million.

“The project is shut down, we’re demobilizing,” said Promec CEO Peter Capkun in an interview with La Presse. “We’re stuck in a dead end. The leaders were promising money day by day…”

RCV points to instability in the biofuel market as a contributing factor. The company’s court filing notes that “biomethanol prices have been lower than expected in recent years, which has negatively affected the economic and financial prospects of the project,” La Presse reported.

In July, RCV engaged British bank Barclays to find new investors, but by the end of October, no offers had materialized, La Presse reported while citing testimony from Stéphane Demers, CEO for RCV, during Tuesday’s hearing.

For now, the future of the Varennes biomethanol plant remains uncertain as RCV scrambles to secure new financial backing.

Pictured: Proposed future biomethanol plant in Varennes, Que.

Image: RCV