Lion Electric tests the limits of Directors’ and Officers’ releases under the Companies’ Creditors Arrangement Act

Christopher Richter, John Fabello and Cristina Cosneanu of Torys examine the Québec Superior Court’s recent decision in the Lion Electric CCAA proceedings, which significantly narrows the availability and scope of directors’ and officers’ releases in CCAA sales by requiring clear evidence that D&Os made exceptional contributions beyond ordinary fiduciary duties, a demonstrated nexus between the releases and restructuring objectives, and carefully tailored drafting, signalling heightened judicial scrutiny of broad third-party releases, particularly in reverse vesting order transactions.

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