Northvolt’s parent company files for bankruptcy protection in the U.S.

The parent company of Northvolt has placed itself under the protection of American bankruptcy law, but this process would not jeopardize the battery manufacturer’s project in Quebec, according to the company.

Northvolt AB and certain of its subsidiaries filed for Chapter 11 protection of the United States bankruptcy law on Thursday.

However, “Northvolt North America is not included in the request,” reads a statement sent by the company to the media.

“Northvolt Six is a critical part of the company’s future and we remain fully committed to seeing it through. We look forward to continuing to work with all of our stakeholders to make this project a success,” wrote Paolo Cerruti, co-founder of Northvolt and CEO of Northvolt North America.

“The execution plan for the construction of the site continues diligently and carefully, including during the period of restructuring of the parent company in Sweden,” added Paolo Cerruti, who is leading the mega-factory project in batteries in Montérégie.

The Northvolt plant, which is to be built in Saint-Basile-le-Grand and McMasterville, is a $7-billion project in which Quebec and Ottawa have committed to investing $2.4 billion. It initially had three components, namely the manufacturing of cells, cathodes and battery recycling.

“I can reassure Quebecers by saying that today’s news does not concern the Quebec Project. It is the parent company in Sweden that is being placed under protection,” said Christine Frechette, Quebec’s economy minister.

“Because there is a lot at stake and investors, I’m sure, are willing to see the project being pursued. And therefore, the process that is beginning today will permit the Swedish (parent company) to redefine its relation with the investors and to restructure its organization. And so at the end of that process, which would take, I’d say, around five months, we will see the outcomes of the negotiation that is beginning and that will be continued in front of the courts.”

Serious financial difficulties

In September, Northvolt’s parent company announced the dismissal of 1,600 employees in Sweden, or a fifth of its workforce, illustrating the financial difficulties facing the company.

Recently, the company also sold its site in Borlänge in Sweden, where it was to build a factory for materials for cathode, the positive terminal of a battery.

In a statement released Thursday, Northvolt’s parent company wrote that it “will continue to operate as usual during the reorganization, similar to other international companies that have used the Chapter 11 process to reorganize their financial obligations.”

It is also stated that the protection of Chapter 11 of the United States bankruptcy law does not prevent the company from accessing new sources of financing.

“The North American subsidiary will continue its operations, and activities are continuing on the McMasterville site. And since Northvolt Quebec cash position is sufficient to meet its need for at least 18 months,” said Frechette.

Tom Johnstone, interim chairman of the board, said that “despite near-term challenges, this action to strengthen our capital structure will enable us to capture continued market demand for vehicle electrification.”

He added that the company is “delighted with the strong support we have received from our existing lenders and customers.”

“We did put money in the (parent company) headquarters,” said Frechette. “And this is the part of our investment that is the most at risk, I’d say. But the money that we’ve put in the Quebec project is being guaranteed by the land that we have. It’s a loan. We have a loan with a guarantee, the land being the guarantee. And in that land, the Northvolt business has invested more than $100 million. And activities are still continuing on that land.”

–This report by La Presse Canadienne was translated by CityNews