Iovate Health Sciences International Inc. — Entry #108: Memorandum Opinion, signed on 5/12/2026, Granting Foreign Representative's Motion (I) Recognizing and Enforcing the Reverse Vesting Order
Case: Iovate Health Sciences International Inc. nysb · 25-11958
filed September 09, 2025
What this document is
Docket entry #108 · filed May 12, 2026
Memorandum Opinion, signed on 5/12/2026, Granting Foreign Representative's Motion (I) Recognizing and Enforcing the Reverse Vesting Order; (II) Approving the Transfer of the Debtors' Excluded Property; and (III) Granting Related Relief. (related document(s)91, 107) (Anderson, Deanna) (Entered: 05/12/2026)
Who is involved
- Iovate Health Sciences International Inc.
- United States Trustee
Why we have it
We follow this case because it names a company we track, although that company is not a party:
- Nebius: its name “Nebius” appears in a filing in this case.
…0.5232 InteractiveBrkrs IBKR 62.25 -1.45 Nebius NBIS 90.96 0.55 RoyaltyPharma…
- CoreWeave: its name “CoreWeave” appears in a filing in this case.
…CoreWeave CRWV 120.47 8.51…
A free copy from the RECAP archive of federal court filings (mirrored at the Internet Archive), retrieved September 30, 2026. Federal court filings are public records.
Document text
27 page(s), 64,279 characters, converted from the PDF's text layer · plain text.
Full text
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 1 of 27
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------------------------------------x
In re: FOR PUBLICATION
IOVATE HEALTH SCIENCES Chapter 15
INTERNATIONAL INC., et al.,
Case No. 25-11958 (MG)
Debtors in a Foreign Proceeding
-----------------------------------------------------------------------x
MEMORANDUM OPINION GRANTING FOREIGN REPRESENTIVE’S MOTION (I)
RECOGNIZING AND ENFORCING THE REVERSE VESTING ORDER; (II)
APPROVING THE TRANSFER OF THE
DEBTORS’ EXCLUDED PROPERTY; AND (III) GRANTING RELATED RELIEF
A P P E A R A N C E S:
PACHULSKI STANG ZIEHL & JONES LLP
Counsel to the Foreign Representative
1700 Broadway, 36th Floor
New York, New York 10019
By: Steven W. Golden, Esq.
Mary F. Caloway, Esq. (admitted pro hac vice)
MARTIN GLENN
CHIEF UNITED STATES BANKRUPTCY JUDGE
Pending before the Court is Iovate Health Sciences International’s (“Iovate”), in its
capacity as the authorized foreign representative (the “Foreign Representative”), Motion for
Entry of an Order: (I) Recognizing and Enforcing the Approval and Reverse Vesting Order; (II)
Approving the Transfer of the Debtors’ Excluded Property; and (III) Granting Related Relief
(the “Motion,” ECF Doc. # 91). Two declarations are filed in support of the Motion – (1) the
Declaration of Noah Goldstein (“Goldstein Decl.,” ECF Doc. # 92) and (2) the Declaration of
Michael De Lellis (“De Lellis Decl.,” ECF Doc. # 93).
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 2 of 27
The Motion seeks entry of an order that (a) recognizes and enforces the Ontario Superior
Court of Justice’s (the “Canadian Court”) Approval and Reverse Vesting Order (the “Reverse
Vesting Order” ECF Doc. # 99 Ex. A) approving the Subscroption Agreement dated April 2,
2026 (the “Subscription Agreement,” Goldstein Decl. Ex. C) between Xiwang Iovate Holdings
Company Limited (“Iovate Holdings”) and 1001542267 Ontario Inc. (the “Purchaser”) and the
related transactions contemplated by the Subscription Agreement (the “Transaction”); and
approving under sections 363, 1520, and 1521 of the Bankruptcy Code the transfer Iovate, Iovate
Health Sciences U.S.A. Inc. (“Iovate US”), and Northern Innovations Holding Corp. (“Northern
Innovations” and, together with Iovate and Iovate US, the “Chapter 15 Debtors”) right, title, and
interest in and to certain “excluded” United States assets, contracts, and liabilities to a newly-
formed corporation (“ResidualCo”) pursuant to the Reverse Vesting Order, as well as related
relief. (Motion at 1-2.)
I. BACKGROUND
A. Case Background
On September 5, 2025, the Chapter 15 Debtors and associated debtors (the “Canadian
Debtors”) commenced a proceeding under Canada’s Bankruptcy and Insolvency Act (R.S.C.
1985, c. B-3) (as amended, the “BIA”). (Motion ¶ 3.) Upon the grant of an order from the
Canadian Court approving the proceeding and permitting Iovate to act as the Foreign
Representative, the Foreign Representative commenced this Chapter 15 case on September 9,
2025. (Id. ¶¶ 4-5.)
While initially proceeding under the BIA, the Canadian Debtors soon sought to convert
the BIA proceeding into a proceeding under the Canadian Companies’ Creditors Arrangement
Act, R.S.C. 1985, c. C-36 (as amended, the “CCAA”). (Id. ¶ 6.) The Canadian Court issued an
2
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 3 of 27
order on October 31, 2025, granting the Canadian Debtors’ Motion to convert the proceeding
under the CCAA (the “CCAA Proceeding”), appointing KSV Restructuring Inc. (“KSV” or the
“Monitor”) as the Monitor, and Iovate remained the Foreign Representative. (Id. ¶ 7.) This
Court, after initially granting provisional relief to the Chapter 15 Debtors under the BIA
proceeding (ECF Doc. # 20), later recognized the CCAA Proceeding (“CCAA Recognition
Order,” ECF Doc. # 86). (Id. ¶ 8.)
B. The Sale Process
The Canadian Court granted an order approving a sale and investment solicitation process
(the “SISP”) to be conducted by the Monitor with assistance of the Canadian Debtors and Origin
Merchant partners as sales agent (the “Sales Agent”). (Goldstein Decl. ¶ 4.) The Canadian
Court later granted an order giving the Monitor enhanced power to supervise and manage the
Canadian Debtors’ business to ensure a fair administration of the CCAA proceeding and SISP.
(Id. ¶ 5.) The enhanced powers granted to the Monitor enabled them to exercise any powers that
could be properly exercised by a board of debtors of the Canadian Debtors.
The Monitor conducted the SISP in two phases (“Phase 1” and “Phase 2”, respectively).
(Id. ¶ 7.) The Monitor, with the assistance of the Sales Agent, determined the following SISP
milestones:
SISP Commencement November 13, 2025
Court approval of SISP November 28, 2025
Phase 1 Bid Deadline February 4, 2026
Phase 1 Bid Assessment and February 11, 2026
Notification (if any)
Phase 2 Qualified Bid Deadline (if March 20, 2026
applicable)
Auction (if applicable) March 27, 2026
Selection of Successful Bid April 1, 2026
Approval Order Hearing April 15, 2026
Outside Date June 17, 2026
3
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 4 of 27
(Id.) The Monitor received ten (10) letters of intent by the Phase 1 Bid Deadline; from these
letters the Sales Agent received four (4) offers with only two (2) in the form as required by the
SISP. (Id. ¶¶ 9, 11.) On April 1, 2026, the Monitor and Sales Agent selected the bid submitted
by the Purchaser to be implemented pursuant to the Subscription Agreement. (Id. ¶ 12.) The
Monitor determined that the bid from the Purchaser was superior to all other bids submitted. The
table below summarizes the principal terms of the Subscription Agreement: 1
Parties Xiwang Iovate Holdings Company Limited, as the Company.
1001542267 Ontario Inc., as the Purchaser.
Transaction Structure The Transaction is structured as a reverse vesting transaction
whereby:
• at Closing, the Purchaser will subscribe for and acquire
100 common shares in the capital of the Company (the
“Purchased Shares”), free and clear of all Encumbrances
(other than Permitted Encumbrances);
• the Existing Shares and all related plans, agreements,
options, and rights will be terminated and cancelled for no
consideration;
• the Excluded Assets, Excluded Contracts and Excluded
Liabilities (collectively, the “Excluded Property”) will be
transferred to and vested in ResidualCo pursuant to the
Reverse Vesting Order; and
• the Principal Entities (being, the Company, Iovate
International, Iovate USA, Northern Innovations and
Iovate Australia)
Deposit The Purchaser has paid to the Monitor a Deposit representing
approximately 10% of the Purchase Price.
Retained Assets All assets, properties, Business Intellectual Property, Retained
Contracts, undertakings and rights of every kind owned by the
Principal Entities as of Closing, as set forth in Schedule 1.1(cccc)
to the Subscription Agreement, and not including the Excluded
Assets.
Excluded Assets Excluded Assets include:
• tax records and Books and Records relating to Excluded
Liabilities;
• Excluded Contracts;
• the Closing Payment;
1
Capitalized terms not otherwise defined are intended to have the meanings ascribed to them in the
Subscription Agreement.
4
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 5 of 27
• rights in favor of ResidualCo under the Subscription
Agreement;
• assets specifically set forth in Schedule 2.2; and
• any other assets identified by the Purchaser as Excluded
Assets no later than two business days before Closing.
Retained Liabilities The following liabilities shall be retained by the Principal Entities:
• all Post-Filing Claims;
• all Liabilities under the Retained Contracts arising from
and after Closing;
• Cure Costs;
• Tax Liabilities for any period from and after Closing;
• demand promissory notes owing by the Company to
Xiwang Foodstuffs (Qingdao) Co., Ltd and Xiwang
Foodstuffs Co. Ltd. in the aggregate amount of
approximately US $49 million;
• certain pre-filing accounts payable as determined by the
Purchaser; and
• any other Liabilities identified by the Purchaser as
Retained Liabilities no later than two business days before
Closing.
Excluded Liabilities Excluded Liabilities (set forth in Schedule 2.4 to the Subscription
Agreement) will be transferred to ResidualCo pursuant to the
Reverse Vesting Order.
Retained Contracts The Contracts of the Principal Entities specified in Schedule
1.1(dddd) to the Subscription Agreement.
Employee Matters The Company shall cause the applicable Principal Entity to
terminate the employment of each Terminated Employee effective
immediately prior to the Closing Time. The Purchaser may
designate Terminated Employees no later than two (2) days before
Closing.
“As is, where is” The Purchaser will subscribe for and purchase the Purchased
Shares on an “as is, where is” basis.
Court Approvals The Transactions are subject to obtaining the following orders:
• the Reverse Vesting Order; and
• an Order of this Court in the Chapter 15 Case recognizing
and giving effect to the Reverse Vesting Order.
Releases Effective at Closing:
• the Purchaser releases the Monitor and its affiliates,
officers, directors, employees and advisors from all
Released Claims; and
• the Company releases the Purchaser, the Monitor and their
respective affiliates, officers, directors and advisors from
all Released Claims.
Outside Date May 29, 2026
Termination the Subscription Agreement may be terminated:
5
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 6 of 27
• by either party if Closing does not occur by the Outside
Date (provided the terminating party did not cause the
failure);
• by mutual written consent of the parties, with the consent
of the Monitor;
• by either party upon issuance of a Final Order prohibiting
the Transaction;
• by either party upon termination, dismissal or conversion
of the CCAA Proceeding;
• by the Company upon material breach by the Purchaser
that is not cured within 10 days;
• by the Purchaser upon material breach by the Company
that is not cured within 10 days; and
• by either party if the Court declines to grant the Reverse
Vesting Order or this Court declines to grant the Vesting
Recognition Order (provided the terminating party did not
cause such non-approval).
Use of Proceeds Per the Ancillary Order, the Monitor is authorized and empowered
to make distributions to the Royal Bank of Canada as agent for a
syndicate of lenders and the Sales Agent in the amount owing
under the Engagement Letter.
(Id. ¶ 13.) As required by the Purchaser to consummate the Transaction, the Subscription
Agreement is structured as a “reverse vesting transaction.” (Id. ¶¶ 14-15.) This is due to Iovate
possessing multiple licenses to both import goods and sell its products in Canada that cannot
otherwise be transferred. (Id.) The reverse vesting structure will therefore effectively allow the
Purchaser to acquire the Chapter 15 Debtor’s business and assets on a “free and clear” basis
while still being able to retain the otherwise untransferable licenses. (De Lilis Decl. ¶ 6.)
On April 16, 2026, the Canadian Court held a hearing on the then-pending Reverse
Vesting Order and Ancillary Order. As explained in its Endorsement, the Canadian Court
granted both orders, which approved the Subscription Agreement and the transactions and
releases within it. (Endorsement ¶ 6.)
6
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 7 of 27
C. Reverse Vesting Orders, Generally
Before dealing with the Motion itself, we should first examine reverse vesting orders
(“RVOs”), a recently developed operation of Canadian insolvency regimes that do not have a
parallel under Chapter 11. As the name suggests, an RVO utilizes a ‘reverse vesting’ structure.
The debtor cancels all existing shares and issues new shares to a designated purchaser. The
purchaser agrees to accept preferred assets and liabilities, while certain excluded assets and
liabilities are vested into a newly formed “ResidualCo.” Caitlin McIntyre & Olya Antle,
Potential or Problem? The Prospect of Reverse Vesting Under Chapter 11, 34 AM. BANKR. INST.
J. 34, 34 (2025). The purchased company, holding only the assumed assets and liabilities as
desired by the purchaser, may then exit the insolvency proceeding with the ResidualCo being
added as a debtor to the proceeding. (De Lellis Decl. ¶ 6.)
RVOs are a relatively recent innovation in CCAA proceedings thanks to the flexibility
afforded under the CCAA. While RVOs have become more common, they are still not viewed
as the “norm” by Canadian courts – RVOs are not a statutory mechanism and courts in Canada
believe that they should not become the standard procedure in CCAA or BIA proceedings.
Harte Gold Corp. (Re), 2022 ONSC 653, para. 38 (Can. Ont. S.C.). Nonetheless, they have
become quite popular due to their flexibility and ability to allow a purchaser to purchase an
entity with only the assets and liabilities that it wishes to retain. 2 Their rise in popularity is
2
This ability to ‘split’ the entity through an RVO has brought comparisons with the Texas Two-Step. This
Court does not make any pronouncements regarding the Texas Two-Step, but there are a few distinguishing factors
that caution any like-to-like comparison. For one, the Texas Two-Step was statutorily enacted through § 10.901 of
the Texas Business Organizations Code, compared with the RVO which is a creation of practice and authorized
through the CCAA’s broad jurisdictional grant under section 11. Additionally, the timing of the Two-Step, a
“liability shuffle pre-petition,” is markedly different to the RVO which is implemented after the CCAA proceeding
begins and proceeds under both the court and independent monitor’s supervision. McIntyre, Potential or Problem?,
supra, at 35. The RVO also places greater consideration into the rights and interests of creditors and other
stakeholders than a Two-Step, as evident by the adoption of the section 36 factors that are required to approve an
order.
7
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 8 of 27
evident in the over 25 RVOs that were approved by Canadian Courts in 2024, a fifty-percent
increase from the year before and three times the amount that were approved in 2022. Maziar
Peihani, Rethinking the Case for Reverse Vesting Orders in Canadian Insolvency Law, 59 UBC
L. REV. 251, 267-68 (2026).
The authority for Canadian courts, including the Canadian Court overseeing the CCAA
Proceeding, to grant RVOs comes from the wide latitude given to courts under section 11 of the
CCAA: “the court, on the application of any person interested in the matter, may, subject to the
restrictions set out in [the CCAA], on notice to any other person or without notice as it may see
fit, make any order that it considers appropriate in the circumstances.” R.S.C., 1985, c. C-36, §
11. Canadian courts then apply the factors enumerated in section 36(3) of the CCAA, factors
which a court normally is required to consider when approving an asset sale transaction, to the
transaction underlying the RVO. See, e.g. Just Energy Group Inc. et al v. Morgan Stanley
Capital Group Inc. et al, 2022 ONSC 6354, paras. 29-33 (Can. Ont. S.C.); Harte Gold at para.
37; Re B+H Architects Corp, 2026 ONSC 26 at para. 17 (Can. Ont. S.C.). These factors are:
(a) whether the process leading to the proposed sale or disposition was
reasonable in the circumstances;
(b) whether the monitor approved the process leading to the proposed
sale or disposition;
(c) whether the monitor filed with the court a report stating that in their
opinion the sale or disposition would be more beneficial to the
creditors than a sale or disposition under a bankruptcy;
(d) the extent to which the creditors were consulted;
(e) the effects of the proposed sale or disposition on the creditors and
other interested parties; and
(f) whether the consideration to be received for the assets is reasonable
and fair, taking into account their market value.
R.S.C., 1985, c. C-36, § 36. When determining whether to grant an RVO, the reviewing
court will ask the following in addition to the section 36(3) factors: (a) why the RVO is
necessary; (b) whether the RVO structure produces an economic result at least as favorable as
8
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 9 of 27
any other viable alternative; (c) whether any stakeholder is worse off under the RVO structure
than it would have been under any other viable alternative; and (d) whether the consideration
being paid for the debtor’s business reflects the importance and value of the licenses and permits
(or other intangible assets) being preserved under the RVO structure. Harte Gold at para. 38.
As RVOs have become more popular in Canada, debtors in Chapter 15 cases have sought
recognition of such orders in U.S. Courts. Though not within the Second Circuit, many courts
have recognized RVOs approved in Canada. See, e.g. In re Voxtur Analytics Corp., No. 25-
11996 (JKS) (Bankr. D. Del. Feb. 13, 2026); In re STS Renewables Ltd., No. 25-10884 (KBO)
(Bankr. D. Del. Oct. 28, 2025); In re The Lion Elec. Co., No. 24-18898 (DDC) (Bankr. N.D. Ill.
June 26, 2025); In re Chesswood Grp., No. 24-12454 (CTG) (Bankr. D. Del. Mar. 24, 2025); In
re 9139249 Canada Inc., No. 24-19627 (VZ) (Bankr. C.D. Cal. Jan. 10, 2025); In re Elevation
Gold Mining Corp., No. 24-06359 (Bankr. D. Ariz. Dec. 30, 2024); In re VBI Vaccines
(Delaware) Inc., No. 24-11623 (BLS) (Bankr. D. Del. Nov. 20, 2024); In re Contract Pharm.
Ltd, No. 24-10915 (BLS) (Bankr. D. Del. May 28, 2024); In re NextPoint Fin., No. 23-10983
(TMH) (Bankr. D. Del., Dec. 11, 2023); In re Endoceutics Inc., No. 22-11641 (Bankr. D. Mass.
Oct. 12, 2023); In re Acerus Pharm. Corp., No. 23-10111 (TMH) (Bankr. D. Del., June 13,
2023); In re Just Energy Grp., No. 21-30823 (Bankr. S.D. Tex., Dec. 1, 2022). These orders
were entered without accompanying opinions explaining the court’s reasoning.
One of the few opinions issued with an order recognizing an RVO was entered in In re
Goli Nutrition Inc., 2024 WL 1748460 (Bankr. D. Del. Apr. 23, 2024). The court in Goli
Nutrition recognized the RVO as granted by the Canadian court largely due to the lack of
objection from creditors, but the court cautioned against applying the case as precedent:
I stated that I would enforce the order as there were no objections to
the transaction as a whole or its structure. Notice was provided to
9
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 10 of 27
all parties, including shareholders whose stock is being redeemed
and cancelled for no consideration and those who may hold
liabilities that are being vested out to Residual Co. I must
emphasize, however, that I do not know how I would rule on a
similar reverse vesting transaction if there were objections. So, I
cannot stress enough that the order I enter should not be cited in
future motions for the proposition that U.S. courts have
unconditionally approved such transactions.
In re Goli Nutrition, 2024 WL 1748460, at * 2.
D. The Canadian Court Approval of the Reverse Vesting Order
On April 16, the Canadian Court approved the Reverse Vesting Order and Ancillary
Order. The Canadian Court addressed the section 36 factors noted above, in addition to the
factors set out in Harte Gold. (Endorsement ¶¶ 8-10.) Ultimately, the Canadian Court
determined that the Monitor and Sales Agent acted in accordance with the SISP and that the
Transaction was the culmination of efforts to obtain the best price possible. (Id. ¶ 11.)
The Canadian Court was satisfied with the reverse vesting nature of the Transaction,
convinced that it would “reduce potential costs, delay, and execution risk, ensuring the
uninterrupted continuation of the Applicants’ operations.” (Id. ¶ 13.) The Canadian Court noted
that the reverse vesting structure was required to preserve licenses that Iovate possesses that
could not otherwise be transferred, to allow US $114 million in non-capital losses available to be
carried forward that could otherwise not through an asset sale, and would help ensure that
contracts remain with the company through an expedited process. (Id. ¶ 12.) The Canadian
Court was satisfied that approval of the Transaction would provide as positive of an economic
result as any other transaction and noted that there was no opposition to the structure of the
Reverse Vesting Order. (Id. ¶ 14.)
The Canadian Court additionally approved the Releases, noting that they are limited to
claims arising in connection with or relating to the Subscription Agreement, Transaction, and
10
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 11 of 27
proposed Reverse Vesting Order. (Id. ¶ 19.) The Releases satisfied the requirements under
Canadian Law. (Id. ¶ 17.)
The Canadian Court lastly authorized the Ancillary Order, authorizing the requested
distributions requested by the Monitor, as well as extending the stay to allow the Chapter 15
Debtors to seek approval of the Reverse Vesting Order in this Court. (Id. ¶¶ 22-26.)
E. The Motion
As noted above, the Foreign Representative seeks entry of an order (i) recognizing and
enforcing the Reverse Vesting Order; (b) approving the transfer of the Chapter 15 Debtors’ right,
title, and interest in and to the Excluded Property located within the territorial jurisdiction of the
United States to ResidualCo; and (c) related relief. (Motion ¶ 29.)
1. Recognizing the Reverse Vesting Order
The Foreign Representative argues that the Court should recognize the Reverse Vesting
Order under the Court’s authority to grant both “appropriate relief” under section 1521(a) and
“additional assistance” under section 1507 of the Code. 11 U.S.C. §§ 1507, 1521. Regarding its
appropriateness under section 1507, the Foreign Representative notes how the CCAA embodies
a scheme that promises “equitable, orderly, and systemic” distribution to creditors. (Motion ¶ 32
(citing Allstate Life Ins. v. Linter Grp., 994 F.2d 996, 1000 (2d Cir. 1993).)
Additionally, the Foreign Representative claims that creditors and parties in interest have
been treated fairly by being provided with customary notice of the Reverse Vesting Order and
will be given the opportunity to raise objections to the relief requested. (Id.) Third, both
preferential and fraudulent transfers are not permitted under the CCAA. (Id.) The Foreign
Representative also contends that the Reverse Vesting Order is not manifestly contrary to the
public policy of the United States and therefore complies with section 1506. (Id. ¶ 34.) The
11
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 12 of 27
Foreign Representative argues that the sales process outlined in the SISP is similar to the
processes utilized in Chapter 11 cases, and similar RVOs to the Reverse Vesting Order have
been recognized by other courts in Chapter 15 cases. (Id.)
2. Approving the Transaction
The Foreign Representative claims that the entering into the Subscription Agreement and
consummating the transaction was a prudent exercise of business judgment and should therefore
be approved under section 363 as the culmination of the SISP, which was approved by the
Canadian Court and conducted by the independent Monitor. (Id. ¶ 38.) Recognizing that the
issuance of stock may not be a sale transaction of under section 363, the Foreign Representative
alternatively seeks court approval for the transfer of the Excluded Property from the Chapter 15
debtors to ResidualCo. (Id. ¶ 39.) The Foreign Representative touts the SISP process as a
prudent exercise of the Chapter 15 Debtors’ business judgment, noting the extensive negotiations
with multiple parties and transparent marketing process undertaken in an attempt to secure the
most optimal deal. (Id. ¶ 41.) Absent approval of the transaction, the Foreign Representative
claims that all parties involved will suffer “significant, if not irreparable, harm” by not being able
to close the transaction. (Id. ¶ 42.) The Foreign Representative believes that it has acted with
good faith during the process through arms-length negotiations in accordance with the SISP. (Id.
¶ 45.)
The Foreign representative also requests the Purchaser receive the protections set forth in
subsections 363(m) and (n) of the Bankruptcy Code. (Motion ¶ 43.)
3. The Releases
The Foreign Representative additionally seeks recognition and enforcement of the
Releases granted by the Canadian Court as they are justified, reasonable, and appropriate in the
12
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 13 of 27
circumstances; the releases are limited to claims and causes of action directly connected to the
sale process and Transaction. (Id. ¶ 48.) The Foreign Representative argues that Harrington v.
Purdue Pharma L.P., 603 U.S. 204 (2004), does not prohibit a court in a Chapter 15 case from
recognizing and giving effect to nonconsensual third-party releases granted in plenary foreign
proceedings. (Id. ¶ 49.) The holding in Purdue is limited to the statutory construction of section
1123(b)(6) and is not based on the public policy of the United States, which means that a non-
consensual third-party release is not inherently contrary to the public policy of the United States
and does not run afoul of the public policy exception of section 1506. (Id. ¶ 51.)
As they are not contrary to public policy, the Foreign Representative points to principles
of comity to recognize the Releases. Without given full force and effect in the United States, the
Foreign Representative claims that United States-based creditors would have an advantage over
Canadian creditors with the ability to bring claims against the Released Parties, in addition to
undermining the relief granted by the Canadian Court through the Reverse Vesting Order. (Id. ¶
52.)
4. Waiver of Bankruptcy Rule 6004(h)
The Foreign Representative submits that there is cause to waive the 14-day stay under
Bankruptcy Rule 6004(h), and that waiver of the stay will not prejudice the Debtors or any party
in interest because parties will have notice and an opportunity to be heard in both the Canadian
Court and this Court. (Id. ¶ 60.)
One limited objection was made in response to the Motion which has since been
withdrawn.
13
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 14 of 27
II. LEGAL STANDARD
A. Approval of the Reverse Vesting Order
“Section 1521(a) outlines the discretionary relief a court may order upon recognition of a
foreign proceeding, whether main or non-main. . . . The discretion that is granted is ‘exceedingly
broad’ since a court may grant ‘any appropriate relief’ that would further the purposes of chapter
15 and protect the debtor’s assets and the interests of creditors.” In re Asbestos Corp. Ltd., 674
B.R. 855, 868 (Bankr. S.D.N.Y. 2025) (quoting In re Atlas Shipping A/S, 404 B.R. 726, 739
(Bankr. S.D.N.Y. 2009)). Section 1521(a)(7) gives bankruptcy courts the authority to “grant[]
any additional relief that may be available to a trustee, except for relief available under sections
522, 544, 545, 547, 548, 550, and 724(a).” 11 U.S.C. § 1521(a) (emphasis added). Bankruptcy
courts are afforded this broad discretion in the interest of comity and foreign cooperation, and
such relief often extends to the recognition of confirmation orders granted by the foreign courts.
See, e.g., In re Cell C Proprietary Ltd., 571 B.R. 542, 554 (Bankr. S.D.N.Y. 2017) (“The
recognition and enforcement of the Sanction Order is ‘appropriate relief’ of a type not
specifically enumerated in the nonexhaustive list set forth in section 1521(a).”); In re Rede
Energia S.A., 515 B.R. 69, 92-93 (Bankr. S.D.N.Y. 2014) (finding that granting an order that
will “enforc[e] a foreign confirmation order, including the request for an injunction of acts in
contravention of such order” is relief available under section 1521). “Once a case is recognized
as a foreign main proceeding, chapter 15 specifically contemplates that the court will exercise its
discretion consistent with principles of comity.” In re Metcalfe & Mansfield Alt. Invs., 421 B.R.
685, 697 (Bankr. S.D.N.Y. 2010) (quoting In re Atlas Shipping, 404 B.R. at 738).
Relief is regularly granted in parallel to the relief granted in the recognized foreign
proceeding in the name of comity, but bankruptcy courts can refrain from doing so under
14
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 15 of 27
“unique circumstances.” In re Cozumel Caribe S.A. de C.V., 482 B.R. 96, 113 (Bankr. S.D.N.Y.
2012). (“While it is well recognized that comity should be extended in most instances,
bankruptcy courts should also have the discretion to deny granting comity to foreign laws, court
orders and judgments—consistent with over a hundred years of comity precedent—when unique
circumstances warrant it, so long as ‘the interests of the creditors . . . are sufficiently protected.’
11 U.S.C. § 1522(a). Furthermore, courts must deny granting comity in exceptional
circumstances of fundamental importance, when doing otherwise would be manifestly contrary
to the public policy of the United States.”) (emphasis original); see also, In re CGG S.A., 579
B.R. 716, 720 (Bankr. S.D.N.Y. 2017). All actions taken under section 1521 must adhere to
1522(a), which requires bankruptcy courts to ensure the interests of creditors are sufficiently
protected. Sufficient protection is embodied by “three basic principles: ‘the just treatment of all
holders of claims against the bankruptcy estate, the protection of U.S. claimants against prejudice
and inconvenience in the processing of claims in the [foreign] proceeding, and the distribution of
proceeds of the [foreign] estate substantially in accordance with the order prescribed by U.S.
law.’” In re Odebrecht Engenharia e Construção S.A. - Em Recuperação Judicia, 669 B.R. 457,
474 (Bankr. S.D.N.Y 2025) (quoting In re Atlas Shipping A/S, 404 B.R. at 741).
Section 1507 provides additional grounds for the Court to grant relief to the foreign
representative. Section 1507 reads:
(a) Subject to the specific limitations stated elsewhere in this
chapter the court, if re cognition is granted, may provide
additional assistance to a foreign representative under this title
or under other laws of the United States.
(b) In determining whether to provide additional assistance under
this title or under other laws of the United States, the court shall
consider whether such additional assistance, consistent with the
principles of comity, will reasonably assure—
(1) just treatment of all holders of claims against or interests
in the debtor's property;
15
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 16 of 27
(2) protection of claim holders in the United States against
prejudice and inconvenience in the processing of claims
in such foreign proceeding;
(3) prevention of preferential or fraudulent dispositions of
property of the debtor;
(4) distribution of proceeds of the debtor's property
substantially in accordance with the order prescribed by
this title; and
(5) if appropriate, the provision of an opportunity for a fresh
start for the individual that such foreign proceeding
concerns.
11 U.S.C. § 1507.
Finally, any relief, including approval and recognition of the Reverse Vesting Order,
must comply with the public policy exception of section 1506: “[n]othing in this chapter prevents
the court from refusing to take an action governed by this chapter if the action would be
manifestly contrary to the public policy of the United States.” 11 U.S.C. § 1506. Section 1506
has been narrowly construed to ensure claimants are afforded a “fair and impartial proceeding,”
not that they are afforded all the rights and protections they would otherwise receive in an U.S.
court. See In re Ephedra Prods. Liab. Litig., 349 B. R. 333, 337 (S.D.N.Y. 2006) (holding that a
foreign proceeding without a jury is not contrary to the public policy of the United States if the
same proceeding in the U.S. has a jury trial right: “the Procedure here in issue, as amended,
plainly affords claimants a fair and impartial proceeding. Nothing more is required by § 1506 or
any other law.”)
B. Approval of The Transaction
Section 1520 outlines the mandatory relief automatically granted upon recognition of a
foreign main proceeding under chapter 15. Once section 1520(a) applies, sections 363, 549 and
552 also apply to any transfer of a debtor's interest in property within the United States. 11
U.S.C. § 1520(a)(2). In re Atlas Shipping A/S, 404 B.R. at 739. When considering if section 363
16
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 17 of 27
review is required in an ancillary U.S. bankruptcy proceeding “when there is a ‘foreign main
proceeding,’ section 1520(a)(2) instructs the bankruptcy court to apply section 363 to a ‘transfer
of an interest of the debtor in property that is within the territorial jurisdiction of the United
States to the same extent that the sections would apply to property of an estate.’” Fairfield
Sentry Ltd. v. Farnum Place, LLC (In re Fairfield Sentry Ltd.), 768 F.3d 239, 244 (2d Cir. 2014)
(quoting 11 U.S.C. § 1520(a)(2)). A section 363 analysis is not required when the property at
issue is not located within the United States.
1. Asset Sale Pursuant to Section 363 of the Bankruptcy Code
a. Sale of Debtor’s Assets under Section 363(b)
“[T]he trustee, after notice and a hearing, may use, sell, or lease, other than in the
ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). In approving a
transaction conducted pursuant to section 363(b)(1), courts consider whether the debtor exercised
sound business judgment. See Comm. Of Unsecured Creditors v. LTV Corp. (In re Chateaugay
Corp.), 973 F.2d 141, 144-45 (2d Cir. 1992) (approving sale of assets based on a finding that
sound business judgment supported sale because delay in the sale of assets may diminish their
value); Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071-
72 (2d Cir. 1983) (holding that the sale of assets out of the ordinary course of business must be
supported by “some articulated business justification, other than appeasement of major creditors”
and that “a judge determining a § 363(b) application [must] expressly find from the evidence
presented before him at the hearing a good business reason to grant such an application”). Once
the Trustee articulates a sound business justification, there “is a presumption that in making a
business decision the [decision maker] acted on an informed basis, in good faith and in the
honest belief that the action was in the best interests of the company.” Official Comm. of
17
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 18 of 27
Subordinated Bondholders v. Integrated Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992),
appeal dismissed, 3 F.3d 49 (2d Cir. 1993) (citation omitted).
b. Protections to Good Faith Purchasers under 363(m)
Bankruptcy Code section 363(m) states that “The reversal or modification of an appeal or
an authorization under subsection (b) . . . of this section of a sale . . . of property does not affect
the validity of a sale…under such authorization to an entity that purchased . . . such property in
good faith, whether or not such entity knew of the pendency of the appeal, unless such
authorization and such sale . . . were stayed pending appeal.” The Second Circuit has held that
“[g]ood faith of a purchaser is shown by the integrity of his conduct during the course of the sale
proceedings . . . . A purchaser’s good faith is lost by ‘fraud, collusion between the purchaser and
other bidders or the trustee, or any attempt to take grossly unfair advantage of other bidders.’”
Licensing by Paola v. Sinatra (In re Gucci), 126 F.3d 380, 390 (2d Cir. 1997) (citations omitted).
C. Third-Party Releases
Courts in this district have long enforced foreign restructuring plans in Chapter 15 cases
which include nonconsensual third-party releases, most doing so pursuant to sections 1507 and
1521 of the Code. See, e.g., In re Ocean Rig UDW Inc., 570 B.R. 687 (Bankr. S.D.N.Y. 2017)
(recognizing and enforcing scheme of arrangement that released affiliate guarantees); In re Sino–
Forest Corp., 501 B.R. 655, 665 (Bankr. S.D.N.Y. 2013) (enforcing foreign order containing
third-party releases); In re Magyar Telecom B.V., 2013 WL 10399944 (Bankr. S.D.N.Y. Dec. 11,
2013) (ECF Doc. # 26); In re Metcalfe & Mansfield Alt. Inv., 421 B.R. at 696 (concluding that
“principles of enforcement of foreign judgments and comity in chapter 15 cases strongly counsel
approval of enforcement in the United States of the third-party non-debtor release and injunction
18
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 19 of 27
provisions included in the Canadian Orders, even if those provisions could not be entered in a
plenary chapter 11 case”).
While the Supreme Court in Purdue held that “the Bankruptcy Code does not authorize a
bankruptcy court to approve, as part of a plan of reorganization under Chapter 11, a release and
injunction that extinguishes claims against non-debtor third parties without the consent of
affected claimants,” (603 U.S. at 204) Chapter 15 cases decided since Purdue have continued to
recognize nonconsensual third-party releases. In In re Credito Real, S.A.B. de C.V., SOFOM,
E.N.R., 2025 WL 977967 (Bankr. D. Del. Apr. 1, 2025), aff’d, 2026 WL 881444 (D. Del. March
21, 2026), the court examined the differences in language between section 1123(b) of the code,
which the Purdue court held does not authorize the approval of a nonconsensual third-party
releases, and sections 1521 and 1507. What the court determined was that section 1521 and
1507 grant bankruptcy courts significantly more power than section 1123(b) through the
allowance of the court to grant “any appropriate relief.” In re Credito Real, 2025 WL 977967 at
*9.
Section 1521 thus differs from section 1123(b), which “simply
states that a court may include any ‘other’ chapter 11 plan
provision that is not “inconsistent with the applicable provisions of
this title.’” [Id. at *10] The Supreme Court in Purdue read
“other” as directing courts to look to the other provisions of
1123(b) to determine what further relief a court could grant. But
“section 1521(a) does not direct courts to look to the ‘other’
provisions”—listed in subsections (a)(1)–(7)—“when providing
relief under its catchall,” instead allowing “courts to grant ‘any
additional relief that may be available to a trustee.’” Id. The
limitation in section 1521(a), therefore, is not whether the relief is
similar to those listed in 1521(a)(1)–(7), but whether the relief is
available to the trustee. Id.
In re Odebrecht, 669 B.R. at 473 (citing In re Credito Real, 2025 WL 977967 at *10). This
same analysis found similar language enumerating the boundaries “unambiguously” in section
19
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 20 of 27
1507 and therefore determined that section additionally distinct from section 1123(b). In re
Credito Real, 2025 WL 977967 at *12. Given the distinctions in authority, both the courts in
Credito Real and Odebrecht found that third-party releases could be permitted if they, like all
other actions under section 1521, ensured the interests of creditors, the debtor, and other
interested entities are “sufficiently protected” under section 1522(a). In re Odebrecht, 669 B.R.
at 474. They do not run afoul of section 1506 public policy exception. Id. at 475-76 (“As the
Second Circuit has previously stated, “deference to the foreign court is appropriate so long as the
foreign proceedings are procedurally fair and . . . do not contravene the laws or public policy of
the United States.” United JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V., 412
F.3d 418, 424 (2d Cir. 2005). So long as these guidelines are respected, a long string of caselaw
indicates that bankruptcy courts may, acting as ancillaries to foreign proceedings, extinguish
claims that would be available in plenary actions in the U.S. in the name of comity.”)
D. Waiver of Bankruptcy Rules 6004(h)
Bankruptcy Rule 6004(h) provides that “an order authorizing the use, sale, or lease of
property . . . is stayed until the expiration of 14 days after entry of the order, unless the Court
orders otherwise.” FED. R. BANKR. P. 6004(h). The rule is intended to provide time for an
objecting party to appeal a sale order or the assignment of an executory contract before such
order can be implemented. See Advisory Committee Notes to FED. R. BANKR. P. 6004(h).
Collier suggests that because the purpose of the rules is to “protect the rights of an
objecting party,” a court should eliminate the 14-day stay period and allow the sale or the
assignment, as applicable, to close immediately in all cases where there has been no objection to
the procedure. 10 COLLIER ON BANKRUPTCY § 6004.10 (16th 2019) (discussing Bankruptcy Rule
6004(h)).
20
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 21 of 27
III. DISCUSSION
A. The Reverse Vesting Order
As discussed above, few courts have been tasked with recognizing a RVO, with most
granting recognition without an accompanying opinion. The one instance of a court issuing an
opinion accompanying recognition of a RVO, In re Goli Nutrition, saw the court recognize and
enforce the RVO largely on the basis of the lack of objection from parties after adequate notice
was provided to all parties, “including shareholders whose stock is being redeemed and cancelled
for no consideration and those who may hold liabilities that are being vested out to Residual Co.”
In re Goli Nutrition, 2024 WL 1748460 at * 2. While the sole objection received has since been
withdrawn, the Court will still continue with an analysis of the Reverse Vesting Order before
granting recognition.
A bankruptcy court has an “exceedingly broad” power to grant appropriate, discretionary
relief under section 1521 and 1507 of the Code (In re Asbestos Corp., 674 B.R. at 868), which
can extend to the recognition of foreign confirmation orders. This Court is not limited in
granting potential relief by the bounds of relief that would otherwise be available if this was
proceeding under Chapter 11, “provided that such assistance is consistent with the principles of
comity and satisfies fairness considerations set forth in Section 1507(b),” (In re Rede Energia
S.A., 515 B.R. at 90) or the sufficient protection considerations of Section 1522.
The Court recognizes the Reverse Vesting Order, with its rationale grounded by
considerations of comity. U.S. Bankruptcy courts regularly approve transactions and plans
involving Chapter 15 debtors in CCAA proceedings that have been approved through orders in
the Canadian court. See, e.g. In re U.S. Steel Canada Inc., 571 B.R. 600, 612 (Bankr. S.D.N.Y.
2017) (approving of a plan and underling transaction already approved by the Canadian court
21
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 22 of 27
Canadian Court “[b]ased on the principles of international comity.”); see also In re Oak and Fort
Corp., 25-11282-mg (Bankr. S.D.N.Y. Jan. 22, 2026) (ECF Doc. # 46) (order recognizing the
Sanction Order granted in Canadian court for Chapter 15 debtor post-recognition of the case);
Cornfeld v. Investors Overseas Servs., Ltd., 471 F.Supp. 1255, 1259 (S.D.N.Y.1979) (“The fact
that the foreign country involved is Canada is significant. It is well-settled in New York that the
judgments of the Canadian courts are to be given effect under principles of comity. Trustees in
bankruptcy appointed by Canadian courts have been recognized in actions commenced in the
United States. More importantly, Canada is a sister common law jurisdiction with procedures
akin to our own, and thus there need be no concern over the adequacy of the procedural
safeguards of Canadian proceedings.”) (internal citations omitted).
Beyond general considerations of comity, the Reverse Vesting Order will sufficiently
protect the interests of creditors. The Canadian Court determined in granting the Reverse
Vesting Order that “no stakeholder is worse off under the [reverse vesting] structure than they
would be under any other viable alternative.” (Endorsement ¶ 14.) The assurance that all
holders of claims or interests in the debtor’s property have been treated justly is further
supported by independent Monitor leading the process under the SISP and ultimately selecting
the winning bid. “There are a number of protections within the CCAA Proceeding absent in
Chapter 11, chief among which is the Monitor, the independent officer appointed by the
Canadian Court to provide objective oversight and ensure the restructuring is fair and impartial
to all stakeholders.” In re Asbestos Corp. Ltd., 674 B.R. at 875-76 (emphasis added).
Importantly under the Reverse Vesting Order, no creditor’s claim is extinguished; creditor claims
will either continue against the Principal Entities if the claim is retained or be against ResidualCo
if they are expunged through the Transaction “with the same nature and priority as they had
22
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 23 of 27
immediately prior to the Transactions, as if the Transactions had not occurred.” (Reverse
Vesting Order ¶¶ 8, 12.) Finding creditors to be sufficiently protected and thus satisfying the
requirements of section 1522, the Court does not need to determine if the Reverse Vesting Order
is appropriate under section 1507. Recognizing the Reverse Vesting Order is an appropriate
grant of “additional relief” under section 1521(a)(7).
In addition, the recognition of the Reverse Vesting Order is not manifestly contrary to the
public policy of the United States. As noted above, the public policy exception has been
construed as extraordinarily narrow, applying only to instances that implicate the “most
fundamental policies of the United States.” In re Ephedra, 349 B.R. at 336 (citing H.R.Rep. No.
109–31(I), at 109, as reprinted in 2005 U.S.C.C.A.N. 88, 172). Here, while the reverse vesting
structure is different than how a debtor would proceed under Chapter 11, the rights of creditors
and other stakeholders have been protected. The SISP was adopted by the independent Monitor
to implement procedures that would enhance competitive bidding, limit any possibility of
preferential treatment of bidders, and to ensure the maximization of value for the bankruptcy
estate. If the denial of a jury trial right, as was the issue in Ephedra, can be found to not be
contrary to U.S. public policy when the Canadian court otherwise offered “claimants a fair and
impartial procedure” (In re Ephedra, 349 B.R. at 337), then the reverse vesting order structure,
which still ensures the protection of claimants, is certainly not as well.
B. Approval of the Transaction
While the Transaction might have been completed in the exercise of the Chapter 15
Debtor’s sound business judgment, the Court cannot not review the Subscription Agreement and
Transaction under section 363. As the Goli Nutrition court determined, it is not proper to review
the entire transaction contemplated by the RVO under section 363 as “the issuance of stock in a
23
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 24 of 27
debtor company is not a sale transaction under section 363. Goli Canada is not selling an asset, it
is issuing stock. Second, even if it were, the new stock, which is stock in a Canadian company is
not the ‘transfer of an interest of the debtor in property that is within the territorial jurisdiction of
the United States.’” In re Goli Nutrition, 2024 WL 1748460 at * 2 (citing 11 U.S.C. §
1520(a)(2)).
The Reverse Vesting Order authorized Iovate to “terminat[e] and cancel[] all Existing
Shares (as defined in the Subscription Agreement), for no consideration,” and “authoriz[es] and
direct[s] the Company to issue the Purchased Shares to the Purchaser free and clear of any
Encumbrances[.]” (Reverse Vesting Order at 1-2.) This is not a ‘stock sale,’ which would be
subject to approval under section 363 as that involves a debtor selling already issued stock to a
third party. See, e.g. In re New York Trap Rock Corp., 155 B.R. 871 (Bankr. S.D.N.Y. 1993),
aff'd, 160 B.R. 876 (S.D.N.Y. 1993), aff'd in part, vacated in part, 42 F.3d 747 (2d Cir. 1994)
(where the court conducted a section 363 analysis of the sale of already issued stock in the
debtor’s subsidiary). The issuance of new stock is not the sale of property of the debtor and
therefore does not implicate section 363. The Court does not need to determine if the stock issue
involved a transfer of property within the territorial jurisdiction of the United States.
The Foreign Representative alternatively seeks approval of the Excluded Property being
transferred from the Chapter 15 Debtors to ResidualCo. (Motion ¶ 39.) The court’s actions in
Goli Canada can again be instructive. The court, confronted with the transfer of an excluded
asset that would “not be free and clear of liabilities and will be subject to claims” after being
vested out to a Residual Co, relied on Fairfield Sentry to determine that the court was required to
apply the section 363 standard to the transfer (dependent on a question of property ownership
that is not as issue presently before this Court). In re Goli Nutrition, 2024 WL 1748460 at * 5.
24
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 25 of 27
The transfer of the Excluded Property to ResidualCo would implicate section 363 if the
Excluded Property was within the territorial jurisdiction of the United States. The Foreign
Representative has yet to determine what will ultimately constitute the extent of the Excluded
Property – according to the Subscription Agreement, a detailed list of the excluded assets and
contracts will “follow no later than two (2) Business Days prior to the Closing Date.”
(Subscription Agreement, Schedules 1.1(DDDD); 2.2). During the May 6, 2026 hearing, the
Foreign Representative indicated to the Court that physical assets currently located in the United
States will not constitute any of the Excluded Property. Recording of Hearing at 28:30-29:30, In
re Iovate Health Sciences Int’l. Inc., 25-MG-11958 (Bankr. S.D.N.Y. May 6, 2026). As none of
what will be transferred as part of the Excluded Property will include a “transfer of an interest of
the debtor in property that is within the territorial jurisdiction of the United States,” the Court
does not need to examine the factors of section 363 with respect to any part of the transaction.
11 U.S.C. § 1520(a).
The Court does find that the Purchaser acted in good faith and should be granted
protections under section 363(m) as needed. The Monitor was informed that the Purchaser is not
related to Iovate per section 36 of the CCAA, which would have required satisfaction of a more
stringent criteria before the Canadian Court could grant the Reverse Vesting Order if there was a
connection. 3 (Goldstein Decl. ¶ 12.) The Monitor nonetheless still conducted the analysis under
section 36 and found that its factors were satisfied. (Id.) The sales process conducted via the
3
Subsection 36(4) of the CCAA provides that “[i]f the proposed sale or disposition is to a person who is
related to the company, the court may, after considering the factors referred to in subsection (3), grant the
authorization only if it is satisfied that (a) good faith efforts were made to sell or otherwise dispose of the
assets to persons who are not related to the company; and (b) the consideration to be received is superior to
the consideration that would be received under any other offer made in accordance with the process leading
to the proposed sale or disposition.” In turn, subsection 36(5) of the CCAA defines “a person who is related
to the company” as including “(a) a director or officer of the company; (b) a person who has or has had,
directly or indirectly, control in fact of the company; and (c) a person who is related to a person described in
paragraph (a) or (b).”
25
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 26 of 27
SISP ensured a broad canvassing of the market, and the Foreign Representative has no
knowledge of any party, including the Purchaser, of engaging in conduct to suggest fraud or
collusion. (Id. ¶ 17.)
C. Approval of the Releases
The Court recognizes the requested releases. As discussed above, while releases such as
the ones included in the Reverse Vesting Order might be impermissible if granted by this Court
in a Chapter 11 proceeding, this Court has the authority to recognize such releases already
approved by the Canadian Court if the interests of creditors, the debtor, and other interested
entities are “sufficiently protected” under section 1522(a). In re Odebrecht, 669 B.R. at 474.
The releases are properly tailored to ensure sufficient protection and the just treatment of all
claimants, limited in scope to any claims against the Released Parties arising in connection with
or relating to the Subscription Agreement, the completion of the Transactions, and the Reverse
Vesting Order. (Endorsement ¶ 19.) The Releases do not cover claims constituting fraud or
willful misconduct. (Reverse Vesting Order ¶ 23.) The releases are in kind with those approved
by the Court in Odebrecht, where relevant parties were released from liability in relation to the
plan and foreign court order except for liability arising from gross negligence, fraud, willful
misconduct or professional malpractice. In re Odebrecht, 669 B.R. at 463-64.
D. Waiver of Bankruptcy Rules 6004(h)
Given the withdrawal of the sole objection, the Court will waive Bankruptcy Rule
6004(h). See, c.f. 10 COLLIER ON BANKRUPTCY § 6004.10 (16th 2019) (discussing how a waiver
of the 14-day stay under Bankruptcy Rule 6004(h) is appropriate where "there has been no
objection to the procedure" (emphasis added)).
26
25-11958-mg Doc 108 Filed 05/12/26 Entered 05/12/26 08:09:34 Main Document
Pg 27 of 27
IV. CONCLUSION
As noted above, the Court
RECOGNIZES the Reverse Vesting Order,
DECLINES TO REVIEW the Transaction under section 363;
APPROVES the 363(m) protections for the Purchaser;
RECOGNIZES the Releases; and
GRANTS the Waiver of Bankruptcy Rules 6004(h).
A separate order granting the requested relief has already been entered. (ECF Doc. #
107.)
Dated: May 12, 2026
New York, New York
Martin Glenn
MARTIN GLENN
Chief United States Bankruptcy Judge
27