Northvolt says its planned electric vehicle (EV) battery plant in Quebec will go ahead despite the Sweden-based company and some of its subsidiaries filing for Chapter 11 bankruptcy protection in the United States.
Northvolt's $7 billion plant is set to be constructed about 25 kilometers east of Montreal.
The company said the subsidiary responsible for its projects in Canada is financed separately and "will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt's strategic positioning."
The province's economy minister Christine Fréchette also provided reassurances that the EV plant would be unaffected by the bankruptcy filing.
"Today's news does not concern the Quebec project," she said during a press conference on Thursday. "It is the parent company in Sweden that is being placed under protection."
The province has granted Northvolt a $240 million secured loan to help buy land for the plant and has invested $270 million in its parent company Northvolt AB.
Fréchette expressed optimism about Northvolt's future and its ability to restructure its operations through the bankruptcy process.
Northvolt expects the Chapter 11 process will allow it to access new sources of funding, including approximately $145 million in cash collateral and $100 million in debtor-in-possession financing.
On Friday, the day after the bankruptcy filing was announced, Northvolt co-founder Peter Carlsson stepped down as CEO.
The search process for a new CEO has commenced, the company said.
"Today marks a significant new phase for Northvolt as well as for me personally. The Chapter 11 filing allows a period during which the company can be reorganized, ramp up operations while honoring customer and supplier commitments, and ultimately position itself for the long-term," Carlsson said in a statement.
"That makes it a good time for me to hand over to the next generation of leaders."