The Lion Electric Company (LEV-T) announced this morning it expects to seek creditor protection after its credit and loan facilities expired, leading the electric vehicle manufacturer to discuss restructuring and a formal sales and investment process.

The company had received two weeks of extensions to find the financing to repay a credit agreement with National Bank of Canada, and a loan agreement with Finalta Capital Fund, L.P. and a subsidiary of Caisse de dépôt et placement du Quebec.

Both expired on Dec. 16.

Lion Electric had been evaluating options to keep the company afloat during that time, including restructuring its obligations, a sale of the business or its assets, and finding additional investors.

No alternatives surfaced nor were any further extensions were granted, leading to the defaults on the facilities.

Lion will file for protection under the Companies' Creditors Arrangement Act “to restructure its business and financial affairs” and “pursue a formal sales and investment solicitation process” for its business or assets. Lion Electric is also in discussions with senior lenders to obtain funds for a new debtor-in-possession credit facility.

Trading of Lion Electric’s common shares and listed securities on the Toronto Stock Exchange and the New York Stock Exchange have been halted, the Saint-Jerome, Que-based company announced Tuesday morning. The pause will remain until the exchanges review the suitability of the company for listing.

The update continues a streak of bad news for the company, which has struggled financially, made substantial layoffs and sold its innovation centre in Mirabel, Qué for $50 million to repay a portion of its debts.

Lion Electric’s dismal year

Lion Electric is one of the Canadian and Quebec governments’ biggest bets on electrified transportation, receiving over $150 million in combined investment. Private investors include Mach Group and the Mirella & Lino Saputo Foundation.

While over 2,200 of its trucks and buses have hit the road, it has hit a rough patch financially, joining several of its peers in the industry such as Taiga Motors and Northvolt. Lion Electric management blamed bad timing on government financial support from Canada and the U.S., and weaker-than-expected demand for its products.

The fiscal troubles forced the company to lay off much of its workforce. The latest cuts amounted to over half its global employees, leaving the company at 300 staff members. Over 500 Lion Electric workers were laid off in 2024, most on a "temporary" basis.

Its current liabilities reached approximately US$260 million as of Q3, with US$150 million in long-term debt and other debts. Lion Electric reported it had US$26.3 million in cash as of its last financial report.

Net loss for the nine months ended Sept. 30 stood at US$74.9 million.

To recover from its position, Lion Electric said it would consider switching its manufacturing to batches, selling battery packs to third parties, subleasing a portion of its factory in Joliet, Ill., and reducing spending.

Its innovation centre housed at the Montréal-Mirabel International Airport was sold to Montréal–Trudeau International Airport on Dec. 6 to help address its long-term debt. Operations at the Joliet factory were halted in December.

Le Journal de Montréal reported Lion Electric’s investors have considered forming a consortium to save the company, which would depend on the support of the Saputo family, one of Canada’s wealthiest.

If private investors bail out Lion Electric, the Quebec government will also participate, economy minister Christine Frechette said.