Below is our initial take on recent bankruptcy-related developments:
Li-Cycle files for bankruptcy, seeks protection for facilities in Greece | WXXI News
Li-Cycle filed a chapter 15 in the Southern District of New York on Wednesday to support its Canadian CCAA proceeding. The Toronto-based EV battery recycling firm, which has a massive facility in Western New York that has been halted, with a potential stalking horse credit bid.
S&K Take: Li-Cycle filed a CCAA proceeding paired with a chapter 15 in the SDNY (Judge Bentley) seeking a going concern transaction. The company reports a prospective DIP with its prepetition lender Glencore, which held approximately $200 million in secured debt and $127 million in unsecured notes. Glencore will (allegedly) also be acting as stalking horse purchaser. Li-Cycle has encountered extreme difficulty in completing a Rochester, NY plant, which was a critical part of a “spoke and hub” concept. The company had “spoke” facilities where recycled batteries were converted to “black mass” (a ground powder containing valuable metals, also a “War Pigs” lyric), which would then go to a “hub” facility where the black mass would be processed into critical battery-grade materials. The problem? The one and only “hub” facility is the Rochester plant, which halted construction in 2023. The DOE had committed to a $475 million credit facility to support construction, but the company couldn’t meet the capital requirements to access that cash. Li-Cycle is one of many lithium-related businesses to succumb to market pressures (huge capex requirements, supply chain issues, rising costs, competition, position of the current administration, et al.). These include many businesses with some form of “volt” in their name (Proterra, Volta, Lordstown, iM3NY, and Northvolt to name a few).
Boy Scouts organization defeats appeals over $2.46 bln sex abuse settlement | Reuters
The Third Circuit ruled on Tuesday that appeals of the BSA plan, which claimants argued was illegal due to sweeping legal protections covering organizations that had not themselves filed for bankruptcy, came too late after the Boy Scouts emerged from Chapter 11.
S&K Take: The Third Circuit largely denied the appeals of certain claimants which sought to overturn the BSA plan based on Purdue and its prohibition against nonconsensual third-party releases. The Court found, among other things, that the Bankruptcy Court had related-to jurisdiction over claims against nondebtors, and that statutory and equitable mootness applied to bar the appeals (although not with respect to certain discrete insurer claims that are outside the scope of this brief discussion). The Court generally tiptoed around the equitable mootness arguments, noting that the Supreme Court has not rendered a decision on equitable mootness and it is still good law in the Third Circuit. The Court called equitable mootness “limited in scope” and a doctrine that should be “cautiously applied.” Courts continue to tread carefully, although whether the USSC ultimately takes it up is an open question.
US plant-based restaurant chain Planta files for bankruptcy | Reuters
The vegan restaurant chain Planta, which has locations in major cities throughout the U.S. and Canada, filed for Chapter 11 bankruptcy on Monday.
S&K Take: Food and Bev strikes again. Planta is a vegan food chain that had $40 million in revenue, but has now filed (a garden variety) bankruptcy. The Debtors blame the usual suspects—Covid, inflation, increased costs (wages and food products), and a bonus basis, food delivery apps. The debtors want to run a sale process funded by a potential lender which will give way to a plan of liquidation. Food has been a tough business for a long time, tofu or otherwise.
