Houlden & Morawetz Newsletter
insolvency, RVO, CCAA, statutory authority, creditor rights, public interest
Reverse vesting orders (RVO) are a new tool being used by insolvency practitioners in Canada’s Companies’ Creditors Arrangement Act (CCAA) and other insolvency proceedings, where the debtor is not required to propose a restructuring plan and creditors are not permitted a vote on the going-forward strategy. The article starts from the premise that the court has authority to approve an RVO pursuant to sections 11 and 36 of the CCAA and the court’s general authority under the statute. However, it suggests that there must be exceptional circumstances for the court to be persuaded to bypass provisions of insolvency legislation aimed at giving both secured and unsecured creditors a meaningful voice/vote in the proceedings, as they are the residual claimants to the value of the debtor’s assets during insolvency. It highlights some issues for consideration as the courts move forward in their deliberation of RVO and proposes questions the courts should be asking of their court-appointed monitors when considering such transactions.
Janis Sarra, "Reverse Vesting Orders – Developing Principles and Guardrails to Inform Judicial Decisions" (2022) Houlden & Morawetz Newsletter, INSOLVNEWS 2022-6.
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