Commitments and contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

As of December 31, 2023, there were $8.3 million in committed purchase orders or agreements for equipment and services (December 31, 2022: $9.5 million, October 31, 2022: $9.2 million, October 31, 2021: $6.9 million).

Moelis Engagement

As described in Note 1, the Special Committee selected Moelis as its financial advisor in relation to certain initiatives to strengthen its financial position and enhance liquidity of the Company. The Company has entered into a contingent fee arrangement with Moelis, which includes success fees that become payable upon closing certain financing transactions, depending on the deal structure and size.

Legal Proceedings

The Company is and may be subject to various claims and legal proceedings in the ordinary course of its business. Due to the inherent risks and uncertainties of the litigation process, we cannot predict the final outcome or timing of claims or legal proceedings. The Company records provisions for such claims when an outflow of resources is considered probable and a reliable estimate can be made. No such provisions have been recorded by the Company.

Shareholder Litigation relating to the October 23, 2023 Announcement of Rochester Hub Construction Pause

Three shareholder suits were launched following the Company’s announcement on October 23, 2023 that it would be pausing construction on the Rochester Hub project, being the Davis, Wyshynski and Nieves actions, described below.

On November 8, 2023, a putative federal securities class action lawsuit was filed in the U.S. District Court for the Southern District of New York against the Company, its CEO, and its CFO, on behalf of a proposed class of purchasers of the Company’s common shares during the period from June 14, 2022 through October 23, 2023. The complaint, which is captioned as Davis v. Li-Cycle Holdings Corp., et al., 1:23-cv-09894 (S.D.N.Y.) (the “Davis Securities Action”), asserts claims under Sections 10(b)

and 20(a) of the Exchange Act, and alleges that the defendants issued false and misleading statements regarding the Rochester Hub’s construction budget, costs and timeline, which were allegedly revealed on October 23, 2023, when the Company announced that it would pause construction on the Rochester Hub project. The complaint seeks compensatory damages and an award of costs. In view of the uncertainties inherent in litigation, we do not express a judgment as to the outcome of this litigation. No amounts have been recorded for any potential liability arising from this matter. The Company has not recorded a provision for the claim as outflow of resources is not considered probable and a reliable estimate of potential damages cannot be made.

On November 27, 2023, a putative Ontario securities class action claim was filed in the Ontario Superior Court of Justice against the Company and its CEO. The claim was amended on February 8, 2024. The claim is on behalf of a proposed class of purchasers of the Company’s common shares during the period from February 27, 2023 through November 10, 2023. The claim, which is captioned as Wyshynski v. Li-Cycle Holdings Corp. et al., Court File No. CV-23-00710373-00CP, alleges common law secondary market misrepresentations and, if leave is granted under Part XXIII.1 of the Securities Act (Ontario), statutory secondary market negligent misrepresentations. The Wyshynski claim alleges that the Company’s public disclosures through the class period contained misrepresentations because they omitted materials facts regarding the cost of the Rochester Hub project and the availability of financing. The Wyshynski claim alleges that the purported misrepresentations were publicly corrected on (i) October 23, 2023, when the Company announced that it would pause construction on the Rochester Hub project; and (ii) November 13, 2023, with the release of the Company’s Q3 2023 earnings. The putative class includes all persons who acquired Li-Cycle common shares during the class period and who held some or all of those common shares until after the release of at least one of the alleged corrective disclosures. The claim seeks compensatory damages and an award of costs. In view of the uncertainties inherent in litigation, we do not express a judgment as to the outcome of this litigation. No amounts have been recorded for any potential liability arising from this matter. The Company has not recorded a provision for the claim as outflow of resources is not considered probable and a reliable estimate of potential damages cannot be made.

On December 4, 2023, a putative shareholder derivative action was filed in the Supreme Court of the State of New York, Monroe County, purportedly on behalf of the Company (as nominal defendant) against certain of the Company’s current and/or former officers and directors. The action, which is captioned as Nieves v. Johnston, et. al., Index No. E2023014542 (N.Y. Sup. Ct.), principally concerns the same alleged misstatements or omissions at issue in the Davis Securities Action, and asserts common law claims for breach of fiduciary duty, waste, unjust enrichment, and gross mismanagement. The action seeks to recover unspecified compensatory damages on behalf of the Company, an award of costs and expenses and other relief. On February 29, 2024, the parties agreed to stay the action pending resolution of the Davis Securities Action. In view of the uncertainties inherent in litigation, we do not express a judgment as to the outcome of this litigation. No amounts have been recorded for any potential liability arising from this matter. The Company has not recorded a provision for the claim as outflow of resources is not considered probable and a reliable estimate of potential damages cannot be made.

Subrogation Liability Claim

On or around January 2, 2024, the Company received a notice of a subrogation liability claim by an insurance company on behalf of one of the other tenants of the New York Spoke’s warehouse. The claim relates to a small fire which occurred at the building on December 23, 2023, involving lithium-ion batteries being stored at the warehouse. The claimant has not provided details of potential damages and the Company’s general liability insurer is providing coverage for this claim, including defense of the claim. The Company has not recorded a provision for the claim as outflow of resources is not considered probable and a reliable estimate of potential damages cannot be made.