Approval and vesting order

The order combines two court functions, approving a sale and vesting the assets in the buyer. A buyer may meet it when buying assets from a debtor in a federal insolvency process or from a receiver. Ask what the order’s wording clears.

The federal rules

Under section 65.13(1) of the Bankruptcy and Insolvency Act, an insolvent person with a filed notice of intention or proposal may not sell assets outside the ordinary course of business unless authorized by a court. Section 65.13(7) lets the court authorize a sale free and clear of any security, charge or other restriction, and if it does, it shall also order that other assets or the proceeds be subject to security in favour of the affected creditor. Under section 65.13(9), such a sale does not affect a licensee’s right to use intellectual property during the term of its agreement. Section 36(1) and (6) of the Companies’ Creditors Arrangement Act set the same court-authorization and free-and-clear rules for a debtor company under that Act.

The provincial power to vest

Ontario’s Courts of Justice Act, section 100, says a court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed. Under section 37 of British Columbia’s Law and Equity Act, where the court has authority to order the execution of a conveyance or transfer of property, it may by order vest the property in the person. This entry does not cover other provinces’ statutes. Read the order itself: see how a vesting order works.