Asbestos litigation continues to rage on in the tort system with no likelihood of receding in the immediate future. In addition to the inherent costs associated with having to defend and settle asbestos claims, managing asbestos litigation can be a significant distraction for corporate officers and directors from running their businesses. The overhang of asbestos litigation can also severely dampen the value of an otherwise successful and profitable company.

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.

On December 10, 2021, the Supreme Court of Canada (“SCC”) rendered its decision in Montréal (City) v.

When a company receives notice that one of its customers has filed for bankruptcy, the initial response may be “Great, there goes the prospect of receiving payment of those outstanding invoices.” While that may be the ultimate outcome, the only way that result may be locked in with certainty is if the company fails to properly assert its claim against the debtor customer in the bankruptcy proceeding. Fortunately, in many instances, filing a proof of claim in a bankruptcy is a simple and straightforward process, and may not even require the assistance of counsel.

The Supreme Court of Canada’s recent decision in Canada v.Canada North Group Inc.[1] provided much needed clarity regarding the order of priority for unremitted source deductions in restructuring proceedings.

Key Note:

Suppliers and subcontractors in the construction industry should be mindful of a recent unreported decision of the Ontario Superior Court of Justice. In Carillion Canada Inc. (Re), the Court held that an automatic cash sweep of Carillion’s Ontario bank account rid the funds of their trust character leaving Carillion’s subcontractors in Canada with no proprietary claim to $22 million sitting in an overseas bank account maintained with a global bank (the “Bank”).

Reverse vesting orders (or “RVOs”) allow the realization of value from assets of a debtor company in circumstances where a traditional transaction model is not effective, preserving the value of permits, tax losses and other assets which cannot be transferred to a purchaser. Two recent decisions demonstrate the willingness of courts to embrace creative solutions, where appropriate, to realize value for stakeholders.

What is a Reverse Vesting Order?

The Alberta Court of Appeal recently released a decision in Bellatrix Exploration Ltd.’s (“Bellatrix”) proceedings under the Companies’ Creditors Arrangement Act (“CCAA”), in which the Court dismissed Bellatrix’s appeal of the lower court’s decision that certain agreements (the “Contract”) between Bellatrix and BP Canada Energy Group ULC (“BP”) constituted an eligible financial contract (“EFC”).

At the outset of the COVID-19 pandemic, provincial emergency orders required the majority of businesses to migrate their workforce to a work-from-home environment. As the pandemic has persisted, what was originally a short-term solution for many businesses, has led many of them to reconsider their current and future need for office space. For those businesses tied into long-term leases, many have turned to subleasing all or a portion of their space as a way to reduce their overhead.