Enerkem: a $175 million credit bid, and the biorefinery left in Edmonton

The plant in Edmonton was built to prove a process. Enerkem Inc., a Montreal company founded in 2000, turns non-recyclable waste into a synthesis gas and the gas into methanol, cellulosic ethanol and other chemicals, on platforms it says are protected by over 120 patents. Its partnership Enerkem Alberta Biofuels L.P. operated "a commercial-scale demonstration biorefinery in Edmonton," fed with municipal solid waste supplied by the city and designed to help it reduce the household waste it sent to landfill (Initial Application, May 11, 2025, paras. 18–19, 23, 35 and 41). By the company's account the plant "successfully achieved its technology demonstration objectives at commercial scale." It was retired on January 30, 2024 all the same, because "the local regulatory landscape was not favorable for low carbon fuels leading the facility to become uneconomical," leaving "lingering debts and potential liabilities to a variety of creditors, including the City of Edmonton" (Initial Application, May 11, 2025, para. 43).

Enerkem Inc. has since left its own proceeding under the Companies' Creditors Arrangement Act. A reverse vesting transaction closed on September 2, 2025, and its three secured noteholders took all of its equity; the Edmonton partnership and its general partner were left out of the deal (Certificate of the Monitor, Sept. 2, 2025; Amended RVO Application, July 25, 2025, paras. 22 and 41). The plant is now, in the monitor's words, "the only remaining tangible asset in these CCAA Proceedings," and since June 5, 2026 it has been under an enforcement order from Alberta Environment and Protected Areas requiring the site's investigation, remediation, decommissioning and reclamation (Sixth Report, Sept. 24, 2026, paras. 22 and 40).

The noteholders' company

When Enerkem filed on May 11, 2025, its unaudited balance sheet at March 31 showed total assets of $26,261,000 against total liabilities of $432,173,000 (First Report, May 11, 2025, paras. 1 and 37). Its principal secured creditors held its notes: Repsol Química, S.A., ESC Sustainable Solutions Fund, L.P. (Eyre Street) and funds managed by Monarch Alternative Capital LP. Convertible notes issued to them in March 2022, in principal amounts of C$95 million and US$48 million, stood at C$222 million with accrued and capitalized interest, and superpriority notes added in February 2024 at about C$71.5 million. The superpriority notes had matured on November 30, 2024 and were unpaid, though the noteholders had not demanded payment. A 2014 loan from Fiera Private Debt Fund IV LP and the Federation of Canadian Municipalities, guaranteed by the Edmonton partnership and its general partner and secured first on their assets, stood at about C$17 million (First Report, May 11, 2025, paras. 42–47).

In the company's account, closing Edmonton removed "over $40M of losses per year." A plant under construction in Varennes, Québec, which licenses Enerkem's technology, met "extensive and unexpected delays and cost increases"; Enerkem suspended its supply agreement over approximately $20.8 million in unpaid invoices, and the owner, Varennes Cellulosic Ethanol L.P., filed its own CCAA proceeding on March 11, 2025. Repsol's final investment decision on the Ecoplanta plant near Tarragona, Spain, also to use Enerkem's technology, came on January 29, 2025, after delays Enerkem attributes in part to Repsol's concerns about a Spanish windfall tax on energy companies. The consolidated net loss before net finance income or costs was $211.9 million in 2023 and, on draft figures, $70.2 million in 2024 (Initial Application, May 11, 2025, paras. 7, 47–48, 52–53, 92 and 94–95).

On May 10, 2025, the day before the filing, Enerkem and an ad hoc committee of the three noteholders signed a binding term sheet for a credit bid under the CCAA; on May 12 Justice Céline Legendre granted the initial order, with Repsol as interim lender for up to $12.5 million at 15% a year (Amended RVO Application, July 25, 2025, paras. 9 and 13; First Report, May 11, 2025, para. 85). Deloitte, the company's financial advisor since December 2023, became monitor. A sale process ran alongside to find a "Superior Transaction" repaying the interim loan and the notes in full in cash or otherwise acceptable to the company and the committee; the noteholders' deal was not itself subject to it (First Report, May 11, 2025, paras. 10–11, 56 and 62). The monitor and Deloitte Corporate Finance solicited 182 potential bidders, and 11 signed non-disclosure agreements. At the June 19 deadline no one had submitted a letter of intent, and the process ended (Amended RVO Application, July 25, 2025, paras. 23–26; Third Report, July 25, 2025, paras. 31–33).

What $175 million bought

The subscription agreement of July 22, 2025 set the consideration as a credit bid of $175 million of note principal. Principal above that became "Excluded Secured Notes Claims" and went to a new shell, ResidualCo 2 (Amended RVO Application, July 25, 2025, para. 35). Accrued interest, and interest capitalized into principal, was forgiven for no consideration. Enerkem Inc. issued 20,000,200,000,000 new Class A common shares against the bid and consolidated them with its existing common shares at 200 million to one, cancelling fractions; the rest of its existing equity, with the options and conversion rights granted in connection with its share capital, was cancelled for nothing (Approval and Reverse Vesting Order, July 30, 2025, para. 20(b), (f)–(j); Amended RVO Application, July 25, 2025, paras. 35, 41(a)). The investors also committed a $25 million first-lien exit facility, into which the interim loan converted dollar for dollar, maturing October 1, 2027 (Amended RVO Application, July 25, 2025, paras. 38–39).

One of the investors' conditions ran to Spain. They were not bound to close unless Enerkem and Repsol had signed the Ecoplanta contracts, Monarch and Eyre Street had reviewed them, and they took effect at closing (Amended RVO Application, July 25, 2025, para. 35). Repsol bought Enerkem Spain's interest in Ecoplanta around December 14, 2023 and is its sole shareholder (First Report, May 11, 2025, para. 29). The monitor wrote that it "understands that the Proposed Transaction facilitates the implementation of the Ecoplanta Contract, a material project for the Company" (Third Report, July 25, 2025, para. 58).

The applicants gave three reasons for a reverse vesting structure: licences, permits and regulatory approvals in Québec and Alberta that an asset sale would have to transfer or replace; intellectual property that would need re-recording; and "significant tax losses" that "may not be preserved in an asset sale structure." Had the order not issued by July 31, the investors could have converted the deal to an asset purchase, with a reduction in consideration to be negotiated (Amended RVO Application, July 25, 2025, paras. 43–46 and 51–52). The monitor supported the structure, expecting no distribution to pre-filing unsecured creditors other than those whose claims were assumed, and wrote that "no creditor other than the Ad Hoc Committee has any economic interest" in the transactions (Third Report, July 25, 2025, para. 53).

Justice Legendre granted the approval and reverse vesting order on July 30, 2025. It releases the investors and Enerkem's present and former directors and officers, carving out fraud, gross negligence and wilful misconduct and, for the directors and officers, claims s. 5.1(2) of the CCAA bars releasing (Approval and Reverse Vesting Order, July 30, 2025, paras. 22(b) and 45). A companion order extended the stay to November 17 (Stay and Monitor's Powers Order, July 30, 2025, para. 11). Closing slipped from the end of July to September 2, which the monitor says required $4.5 million more interim financing than forecast, from which $1.9 million in transaction fees planned for after closing were paid. In the 16 weeks to November 9, 2025, professional fees paid totalled $2,158,000 across eight firms, the largest to Goodmans LLP as noteholders' counsel ($475,000), Stikeman Elliott LLP as Enerkem's counsel ($452,000) and Bennett Jones LLP as the interim lender's counsel ($382,000) (Fourth Report, Nov. 13, 2025, para. 43 and App. A, p. 12).