United States: Insolvency/Bankruptcy/Re-Structuring

Reverse vesting orders (RVOs) have emerged in Canada as an important restructuring tool for debtors. Instead of a traditional sale, debtors’ unwanted liabilities and assets are reverse vested out of the debtor company into a newly created entity, “ResidualCo,” leaving the clean, viable business and its assets in the debtor company for the purchaser to acquire.

Section 502(e)(1)(B) of the Bankruptcy Code governs the disallowance of certain indemnity or contribution claims when the holder of such a claim “is liable with” the debtor...

Two restructuring partners from Levenfeld Pearlstein discuss the critical decision-making process for distressed middle-market companies facing financial challenges. The conversation explores when bankruptcy filing makes strategic sense versus pursuing alternative restructuring paths, examining factors like timing, cost, and desired outcomes. Their insights draw from decades of experience helping companies navigate financial distress through various legal mechanisms.