Reverse Vesting Orders: Popular In Canada And Going International?

Since we last discussed the then-novel restructuring mechanism known as the reverse vesting order (RVO) in 2020, insolvency professionals have been seeking, and courts have been approving, this facilitative remedy with greater frequency. Two particularly notable decisions rendered in 2022 - Harte Gold and Just Energy - show how far the case law has come in the last two years.

Both Harte Gold and Just Energy have provided valuable guidance with respect to the circumstances in which Companies' Creditors Arrangement Act (CCAA) courts will approve an RVO transaction. This guidance confirms that RVOs are clearly taking their place on the menu of options for restructuring an insolvent company, particularly where that company operates in a highly regulated space. Both cases also confirm the availability of a broad release, in the context of an RVO, for the benefit of the debtor and certain third parties who contribute to the restructuring or whose claims must be finally