Resource Sector Taxation, Taxnet Pro

Reverse vesting orders (“RVOs”) have become a common tool for restructuring insolvent corporations in a tax efficient manner. A traditional vesting order effects the transfer of the assets of an insolvent corporation to its creditors or to a buyer, leaving unsatisfied liabilities behind in the debtor. An RVO does the opposite: removing the liabilities and unwanted assets from an insolvent corporation, leaving the wanted assets intact in a debt-free corporation. The creditors or a buyer can then acquire the shares of the debt-free corporation with its tax attributes intact (subject to debt forgiveness and acquisition of control considerations). In the resource context, RVOs are useful for non-tax reasons as well—they often avoid the need to transfer a complex set of assets to a new entity, avoiding registration, permitting and consent issues. Alan Bowman discusses a recent decision of the Court of Kings' Bench of Alberta, Re 2585929 Alberta Ltd., which involved the use of an RVO in the resource context.

Excerpt from “Resource Sector Taxation”, Volume XX, No. 1 (2026) authored by Alan Bowman.