Quebec judge declares Northvolt insolvent as province recovers $200 million

Signage is seen at the entrance to the Northvolt plant, dubbed Northvolt Six, in Saint-Basile-le-Grande, Que., on Thursday, March 27, 2025. THE CANADIAN PRESS/Christinne Muschi

MONTREAL — A Quebec Superior Court judge has declared insolvent the North American branch of battery maker Northvolt as the provincial government looks to recover $260 million owed to it by the company.

Justice Janet Michelin on Friday placed Northvolt Batteries North America under creditor protection at the request of the Quebec government.

Northvolt laid off its entire workforce on Thursday following Economy Minister Christine Fréchette’s announcement earlier in the week that the government would provide no more funding for the company’s planned electric-vehicle battery plant near Montreal. On Friday, Fréchette’s office confirmed that the province has already recuperated nearly $200 million from frozen bank accounts belonging to Northvolt.

“We are deeply saddened by this outcome,” Northvolt said Friday in a statement to the court. “We recognize the difficulty of moving forward, but we remain faced with a brutal reality: that of a project abandoned without having explored all possible avenues, and of a community — employees, suppliers, partners — left without answers.”

Northvolt announced plans in 2023 to build a $7-billion battery “gigafactory” in Quebec, touted as the largest private investment in the province’s history. But the project’s future was thrown into doubt when Northvolt’s Swedish parent company declared bankruptcy in March. Construction on the plant never moved past preparatory stages.

Quebec signed an agreement with the North American subsidiary in April to give it time to find new buyers or investors. But the government says Northvolt received no binding offers by a Sept. 1 deadline, and decided to pull the plug on the project.

“Through all the discussions there have been with potential players, there is no hope that the project can be reborn,” said Jean Gagnon, an insolvency trustee with Raymond Chabot, the firm designated to oversee the creditor protection proceedings.

Gagnon told the court on Friday that 80 groups were approached to solicit interest in the company, but only one non-binding offer was officially submitted by a July deadline.

In August, American battery startup Lyten announced it was acquiring Northvolt’s assets in Sweden and Germany and hoped to buy the Northvolt Six project in Quebec’s Montérégie region. But Gagnon said the project Lyten envisioned was “not of the same nature” as the planned battery plant, and the American company wanted until March 2026 to complete due diligence. A spokesperson for Fréchette said on Tuesday that Lyten wanted more government funding that Quebec was unwilling to offer.

Quebec lost a $270-million investment in Northvolt’s Swedish parent company when it went bankrupt. The government is now trying to recover a $240-million loan issued to Northvolt in 2023 to allow it to purchase the land for the plant. It says the debt is now worth $260 million with interest.

Gagnon confirmed that about $200 million has been withdrawn to repay the debt from accounts belonging to the North American subsidiary that were frozen by the government after the bankruptcy announcement. The government also wants the court to authorize a process for the sale or repossession of the land.

Northvolt laid off its workforce of around 50 employees on Thursday, and the company’s management has resigned. In its statement Friday, the company said it would not oppose the court proceedings because it “recognizes that a project of this scale and scope cannot be carried out without the full support of the government of Quebec.”

However, Northvolt also accused the government of misrepresenting the company’s efforts to find a solution, and of giving virtually no notice of its intentions. “Our employees learned of the end of the project — and therefore of their jobs — from the Journal de Montréal,” the statement said.

The company said its assets are valued at $520 million, but the province didn’t give it a chance to repay its debt before launching court proceedings. “The method used to force the project’s abandonment is unique: at no time did the (government) express its intention to have its loan repaid or suggest any outcome other than the sale of the company and the project,” Northvolt said.

The court decision on Friday will allow the court-appointed monitor to rehire 15 employees to maintain the site where the factory was to be built. The case is scheduled to return to court on Thursday.

This report by The Canadian Press was first published Sept. 5, 2025.