Lion Electric, an electric bus and truck manufacturer based in Quebec, is entering creditor protection.
The publicly traded company, headquartered in Saint-Jérôme, north of Montreal, said in a statement Tuesday it was unable to find a way to repay its debts.
The company was initially given until Dec. 1 to pay back its loans but was granted an extension until Dec. 16. Lion Electric had said it would use this delay to explore the sale of the company or some of its assets.
The loans were provided by the financial institution Finalta Capital and the Caisse de dépôt et placement du Québec (CDPQ), the province’s pension fund manager.
As of early December, Lion Electric’s debt currently stood at more than $411 million.
Entering creditor protection plunges the company further into turmoil and raise questions about its future.
The company has laid off a total of 920 employees in 2024. Manufacturing operations at the company’s U.S. plant in Joliet, Ill., were halted earlier this month after the latest round of layoffs.
Founded in 2008, Lion made its mark by manufacturing North America’s first electric school bus, which has been on the road for 10 years.
School bus operators have expressed concerns that if Lion Electric shuts down, they’ll be stuck with a fleet of buses that are impossible to maintain since only the company’s mechanics are trained to do that.
The company has been the beneficiary of government support. Quebec has invested $177 million into the company, while Ottawa has paid out $30 million.
Raphaël Duguay, assistant professor of accounting at Yale University, said several outcomes are possible for Lion Electric, including being sold or liquidated, but he envisions a future for the embattled company.
“There’s every reason to believe that Lion will restructure and re-emerge. Lion will continue to operate, but on a smaller scale in the longterm,” Duguay told Radio-Canada.
WATCH | Here’s what could happen if Lion Electric goes out of business:
Written by Antoni Nerestant