Reverse Vesting Orders – When Is This "Extraordinary Measure" Appropriate?

Reverse vesting orders (or "RVOs") have become an increasingly popular and useful tool for maximizing recovery in complex insolvencies in Canada, particularly in circumstances where traditional alternatives of asset sales or restructuring plans are not effective or practical. RVOs are very attractive to purchasers of distressed businesses because they can efficiently preserve the value of permits, tax losses and other assets which cannot be easily transferred to a purchaser through an asset transaction. Unlike a plan, court approval of a RVO does not require a creditor vote.

In our May 2021 bulletin, we reviewed two decisions, Nemaska Lithium¹ and Quest University², where Quebec and British Columbia appellate courts upheld the approval of RVOs in the face of stakeholder opposition.