Quebec pulls funding, with monitor saying a buyer is unlikely and liquidation is “very likely”
Lion Electric is heading toward liquidation after the Quebec government refused to provide additional public funding, according to BNN Bloomberg.
Jean-François Nadon, a court-appointed monitor and restructuring specialist with Deloitte, told a Superior Court hearing on Monday that government aid was essential for any potential sale of the struggling electric-vehicle maker.
Nadon stated: “The likelihood of a liquidation of assets is very high.”
He explained that without provincial support, it is unlikely any buyer will present a plan to revive the St-Jérôme, Que.-based manufacturer, which entered creditor protection in December.
He said the province’s refusal to invest further came as a “shock wave” to Lion Electric.
According to recent news reports, a group of buyers had requested $24m from the Quebec government to help restart operations.
Nadon said there had been “no indication” that the buyers could not obtain the funding before the government made its decision.
On Wednesday evening, Quebec Economy Minister Christine Fréchette issued a statement on social media saying the government would not provide more public funds to Lion Electric.
She said it would be irresponsible to do so and later told reporters she “would have expected the private sector to be more involved.”
Premier François Legault also addressed the situation last week.
He linked the province’s decision to the return of US President Donald Trump, stating the United States “isn’t making this a priority” and that Quebec may need to ease its electrification targets.
Legault noted the province had already made significant investments in Lion Electric and stands to lose approximately $140m.
Nadon believes the province reached its decision because of the “socio-political situation” in the US, which he said restricts Lion Electric’s growth strategy and introduces “extremely significant risks” to its future.
Last week, Deloitte began contacting liquidators and auctioneers who had previously shown interest in Lion’s assets. Nadon said they were invited to submit offers over the weekend and that he hopes to bring a proposal to court next Monday.
Following the funding rejection, Lion Electric laid off all but 12 employees. Nadon confirmed the company can still pay the remaining workers but failed to pay rent for all locations on May 1, totalling around $400,000.
Lion Electric produces electric school buses and trucks.
Although the company has approximately 1,175 school buses operating in Quebec, it went through multiple rounds of layoffs last year and halted production at its Illinois facility before filing for creditor protection.
A proposed class-action lawsuit filed by shareholders accuses Lion Electric’s directors and officers of misleading investors and misrepresenting the company’s financial condition.
That case could move forward once a liquidation deal is reached.
