Lion Electric Seeks Creditor Protection Under CCAA Amid Restructuring Efforts
On December 18, 2024, Lion Electric Company (NYSE: LEV, TSX: LEV) announced its decision to file an application for creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Quebec. This move comes as the company, a prominent manufacturer of electric medium and heavy-duty urban vehicles, grapples with significant financial challenges.
The company’s application for an initial order of creditor protection highlights its intention to engage in a formal sale and investment solicitation process (SISP). This process aims to attract proposals from interested parties, facilitating the determination of the most advantageous transaction for the company and its stakeholders.
In conjunction with the application, Lion Electric is also seeking recognition of the CCAA proceedings in the United States under Chapter 15 of the Bankruptcy Code. By doing so, the company aims to establish a framework for restructuring its operations while safeguarding its assets and protecting its stakeholders.
As part of the creditor protection application, Lion Electric is requesting a stay of proceedings to halt creditor claims and exercise of contractual rights. Additionally, the company seeks authorization for an interim debtor-in-possession (DIP) financing, allowing it to maintain operational continuity during the restructuring phase. This financing, provided by lenders under the company’s senior revolving credit agreement, is crucial to fund both the SISP and ongoing business operations.
The appointment of Deloitte Restructuring Inc. is also sought to oversee the CCAA proceedings, ensuring transparency and regulatory compliance. During this protection period, the management of Lion Electric will continue to oversee day-to-day operations, albeit under the scrutiny of the appointed monitor.
This development follows a previous announcement by Lion Electric regarding the expiry of a covenant relief period associated with its senior revolving credit agreement, which ultimately led to defaults under its loan agreements with Finalta Capital and Caisse de dépôt et placement du Quebec. In light of these financial strains, trading of the company’s common shares and other listed securities on both the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) has been suspended. The TSX has initiated a delisting review, and it is expected that trading will remain halted pending the outcome of this review process.
Lion Electric has established itself as a leader in electric transportation, creating zero-emission vehicles, including all-electric school buses. The company prides itself on its innovative approach, with an emphasis on designing and assembling many vehicle components in-house. However, the current restructuring efforts reflect the complexities of navigating market pressures and operational challenges while remaining committed to its vision of a sustainable and environmentally friendly transportation industry.
Seeking to emerge stronger from this restructuring, Lion Electric remains focused on finding new and reliable technologies that meet the needs of its users. The company believes in the transformative potential of all-electric vehicles in improving societal, environmental, and overall quality of life. While the path ahead may be challenging, Lion Electric's commitment to transitioning towards a zero-emission future remains steadfast amidst the restructuring process.
This situation exemplifies the risks and uncertainties that come with being in a rapidly evolving industry, and underscores the importance of financial stability and strategic planning in achieving long-term success. As Lion Electric navigates through this transition, stakeholders and market observers will be closely monitoring its progress and potential outcomes in the upcoming months.
The company’s application for an initial order of creditor protection highlights its intention to engage in a formal sale and investment solicitation process (SISP). This process aims to attract proposals from interested parties, facilitating the determination of the most advantageous transaction for the company and its stakeholders.
In conjunction with the application, Lion Electric is also seeking recognition of the CCAA proceedings in the United States under Chapter 15 of the Bankruptcy Code. By doing so, the company aims to establish a framework for restructuring its operations while safeguarding its assets and protecting its stakeholders.
As part of the creditor protection application, Lion Electric is requesting a stay of proceedings to halt creditor claims and exercise of contractual rights. Additionally, the company seeks authorization for an interim debtor-in-possession (DIP) financing, allowing it to maintain operational continuity during the restructuring phase. This financing, provided by lenders under the company’s senior revolving credit agreement, is crucial to fund both the SISP and ongoing business operations.
The appointment of Deloitte Restructuring Inc. is also sought to oversee the CCAA proceedings, ensuring transparency and regulatory compliance. During this protection period, the management of Lion Electric will continue to oversee day-to-day operations, albeit under the scrutiny of the appointed monitor.
This development follows a previous announcement by Lion Electric regarding the expiry of a covenant relief period associated with its senior revolving credit agreement, which ultimately led to defaults under its loan agreements with Finalta Capital and Caisse de dépôt et placement du Quebec. In light of these financial strains, trading of the company’s common shares and other listed securities on both the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) has been suspended. The TSX has initiated a delisting review, and it is expected that trading will remain halted pending the outcome of this review process.
Lion Electric has established itself as a leader in electric transportation, creating zero-emission vehicles, including all-electric school buses. The company prides itself on its innovative approach, with an emphasis on designing and assembling many vehicle components in-house. However, the current restructuring efforts reflect the complexities of navigating market pressures and operational challenges while remaining committed to its vision of a sustainable and environmentally friendly transportation industry.
Seeking to emerge stronger from this restructuring, Lion Electric remains focused on finding new and reliable technologies that meet the needs of its users. The company believes in the transformative potential of all-electric vehicles in improving societal, environmental, and overall quality of life. While the path ahead may be challenging, Lion Electric's commitment to transitioning towards a zero-emission future remains steadfast amidst the restructuring process.
This situation exemplifies the risks and uncertainties that come with being in a rapidly evolving industry, and underscores the importance of financial stability and strategic planning in achieving long-term success. As Lion Electric navigates through this transition, stakeholders and market observers will be closely monitoring its progress and potential outcomes in the upcoming months.
Topics Auto & Transportation）
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