The Quebec government wants a judge to declare insolvent the North American branch of Swedish battery manufacturer Northvolt, as the province attempts to recoup some of its losses on a failed electric vehicle battery project.
Documents filed in Quebec Superior Court on Tuesday say Northvolt Batteries North America owes more than $260 million on a government loan that allowed the company to buy land near Montreal to build a $7-billion battery plant, The Canadian Press reports.
The government wants the court to launch creditor protection proceedings so that it can recover nearly $200 million from frozen bank accounts belonging to Northvolt and repossess the property where the factory was supposed to be built.
“It is clear that (Northvolt is) no longer able to continue its activities or complete the project in the short or medium term, meaning that they are clearly insolvent,” the documents read.
Quebec Economy Minister Christine Fréchette announced Tuesday the government was pulling the plug on the project and would provide no more public funding. The province has invested $510 million in Northvolt and originally pledged up to $2.9 billion in financing for the project.
“The company’s failure to present a satisfactory plan with regard to Quebec’s interests has led us to assert our rights in order to recover as much of our investment as possible,” Fréchette’s office said in a statement. “This venture proved unsuccessful, and we are obviously disappointed.”
Quebec “had allotted 352 megawatts of power to the project, and Fréchette said that energy will now be allocated elsewhere,” CBC writes.
The court documents also detail how the relationship between the Quebec government and Northvolt deteriorated in recent months, as the company struggled to chart a path forward, CP says.
Northvolt announced plans to build an electric vehicle battery “gigafactory” in Quebec in September 2023. At the time, it was hailed as the largest private investment in the province’s history, but construction never got beyond preparatory work.
The project’s fate has been in doubt since Northvolt’s Swedish parent company filed for bankruptcy in March. The Quebec government’s $270-million investment in the parent company was lost, as was a $200-million investment from the province’s pension fund manager, the Caisse de dépôt et placement du Québec.
The North American subsidiary tried to find a buyer, but on Tuesday, Fréchette said the company had not been able to come up with a satisfactory plan. Now, Quebec is trying to recoup a $240-million guaranteed loan issued in October 2023 to allow Northvolt to purchase the land for the plant. With interest, the debt is now worth more than $260 million, according to the court filing.
The government wants Northvolt declared insolvent so that it can withdraw $198 million from bank accounts belonging to the company, which were frozen by the government after the Swedish parent company declared bankruptcy. It also wants the court to authorize a process for the sale or repossession of the land.
Vivek Astvansh, a McGill University professor with expertise in bankruptcy proceedings, said the province is in a good position to recover the debt. He said the government would be first in line to recoup its loan in creditor protection proceedings. “The court will take the taxpayers’ perspective,” he said.
The court documents detail how Northvolt agreed in 2023 to meet certain milestones by the end of June 2026, including the start of construction for the initial phase of the battery plant. “It is not anticipated or likely that these deadlines will be met,” the filing says.
The government says the parent company’s bankruptcy in March cast doubt on the North American subsidiary’s ability to complete the project, “which was also experiencing significant delays at that time and a virtually non-existent level of progress.”
Quebec signed a new agreement with the company in April to give Northvolt time to find new investors or buyers, which was later extended twice. Bidders had a Sept. 1 deadline to submit binding offers.
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. The province claims Northvolt agreed to negotiate exclusively with Lyten until Sept. 15, which it said violated its agreement with the company.
On Aug. 31, the Quebec government refused a request from Northvolt for a third extension, concluding that the solicitation process “is doomed to failure and has not generated a binding offer to ensure the continuity of the activities and the overall project, such that insolvency proceedings have become inevitable.”
The court documents say any potential agreement between Northvolt and Lyten “suffers from major uncertainties and cannot be considered a binding offer to envisage a viable transaction in the short or medium term.”
A spokesperson for Fréchette said on Tuesday that Lyten wanted more government funding that Quebec was unwilling to offer. In a statement, Northvolt Batteries North America said it found Quebec’s decision to stop funding the project “regrettable,” and said it had been in contact with potential buyers until this week.
“This decision is deeply regrettable for Northvolt North America, particularly given the significant efforts already made—and still ongoing—to identify a buyer, alongside the diligent management of our finances,” the statement said. “While we acknowledge the Government of Quebec’s decision to close this chapter, we remain committed to ensuring a smooth transition and to supporting our employees and partners throughout this difficult period.”
A court hearing for the case has not yet been scheduled.
This report by The Canadian Press was first published Sept. 3, 2025.
