Li-Cycle Seeks Court Protection as Glencore Positions for Potential Takeover

Canadian lithium-ion battery recycler Li-Cycle which once wa valued at over $1.6 billion, has filed for creditor protection in both Canada and the U.S. as it looks to restructure and explore a possible sale of its business.

The company has secured temporary protection from creditors under Canada’s Companies' Creditors Arrangement Act (CCAA) and filed under Chapter 15 of the U.S. Bankruptcy Code to extend protections to its U.S. subsidiaries. These steps give Li-Cycle time to explore strategic options while pausing legal actions from creditors.

In parallel with these developments, mining giant Glencore has formally expressed interest in acquiring Li-Cycle. In March, Glencore sent a letter to Li-Cycle’s board requesting immediate discussions about a potential transaction. The board has since formed a special committee to evaluate the proposal.

This isn’t a surprise to many industry watchers. Glencore has been Li-Cycle’s primary financial backer, and its interest in a full acquisition has long been seen as the most likely outcome. Last year, Circular Energy Storage highlighted a Glencore takeover as the most probable path forward, noting the mining company’s deep integration in Li-Cycle’s downstream operations.

As part of the restructuring process, Glencore has agreed to a “stalking horse” credit bid of at least $40 million for key Li-Cycle assets, including its pre-processing facilities in Arizona, Alabama, and Germany, as well as the Rochester Hub project in New York. The offer also includes some of the company’s intellectual property and liabilities. Other bidders can still come forward, but Glencore’s bid sets a minimum price.

A Li-Cycle acquisition would strengthen Glencore’s battery recycling and materials processing footprint. The company already owns Agmet, a processor of black mass — the intermediate material produced from battery recycling — in Ohio. With Li-Cycle’s preprocessing sites and the downstream refining capabilities Glencore operates in Sudbury (Canada) and Kristiansand (Norway), the deal would create a vertically integrated battery materials supply chain.

It could also give Li-Cycle the financial stability needed to unlock a $475 million conditional loan from the U.S. Department of Energy. The loan was intended to help fund Li-Cycle’s Rochester Hub, a key hydrometallurgical facility for processing battery materials. However, the company has not met the required conditions to access the funds, and it has yet to file its full-year financials for 2024.

Li-Cycle will now move forward with a court-supervised sale and investment process, which could lead to a formal acquisition. In the meantime, operations will continue under the oversight of a court-appointed monitor. The company will maintain its Germany-based recycling plant and wind down most of its other European and Asian subsidiaries.

The next key milestone is a court hearing on May 22, where Li-Cycle will seek approval for the Glencore bid to act as the baseline offer, the interim financing agreement, and an extension of its protection period.