Lion Electric, a Quebec-based manufacturer of all-electric heavy-duty vehicles, has been granted creditor protection after defaulting on two loans.
A release issued on December 19 stated that Lion Electric “intends to continue assisting its customers with the maintenance and servicing of school buses and trucks.” The company’s management will continue to be responsible for day-to-day operations during this period, while Deloitte Restructuring Inc. will oversee the process, according to the terms of the creditor protection.
Under credit protection, lenders are prevented from seizing assets while a defaulting company explores options to pay its debts. Options can include restructuring obligations, selling the business or assets, or finding new investors.
Sales of Lion Electric’s stocks have been paused on the New York and Toronto Stock Exchanges.
Lion Electric said it is still in negotiations “with its senior lenders” to secure additional funds. At the end of November, le Journal de Montréal reported that a consortium of investors led by the Saputo family were considering coming to Lion’s aid.
The company is also considering switching manufacturing to batches, selling battery packs to third parties, subleasing a portion of its factory in Joliet, Illinois, and reducing spending, writes Sustainable Biz.
Lion Electric manufactures all-electric buses and trucks, and had entered the New York Stock Exchange in 2020. In 2021 it was showing strong performance after announcing that it would build plants in Saint-Jérôme, Quebec, and in Joliet, citing good “regulatory tailwinds.”
The company garnered favourable media coverage as recently as February, 2023, when the Globe and Mail called it “a disrupter in an industry ripe for change.”
A total of 2,100 Lion Electric vehicles were reportedly on the road as of July, 2024. Investors had initially been told the company would sell 15,800 trucks and 2,600 buses—and revenues would reach $5 billion—by 2024.
Financial storm clouds then began to shadow the outlook for Lion, and the company let much of its work force go in a series of layoffs between late 2023 and August of this year. Slower than expected sales have put the company in desperate need of funding in recent months; Lion attempted to alleviate some of its debt by selling its innovation centre to Montréal–Trudeau International Airport on Dec. 6.
The Globe and Mail had reported in November that the poor performance was caused by “supply chain disruptions and government red tape.” Le Journal de Montréal writes that executives and workers blamed disorganized management and cost overruns.
Most recently, the company was unable to repay two loans—one from a syndicate of banks, the other from Finalta Capital and Quebec’s pension fund manager, the Caisse de dépôt et placement du Québec—by a Nov. 30 deadline. The deadline was extended to December 16 to give the company more time to find funds.
But Lion was still unable to come up with the money and defaulted. A December 19 release announced that the Superior Court of Quebec had granted Lion Electric creditor protection under the Companies’ Creditors Arrangement Act.
