Synaptive ResidualCo Assigned into Bankruptcy Following Reverse Vesting Transaction

1001270243 Ontario Inc., the residual entity created under a reverse vesting order (RVO) in the Synaptive Medical CCAA proceedings, was assigned into bankruptcy on September 3. Synaptive, a Toronto-based medical device and technology company specializing in neuro-imaging and precision intervention tools, obtained CCAA protection on March 19, 2025, when the court granted an initial order that included access to debtor-in-possession financing from Export Development Canada. A sale and investment solicitation process followed, canvassing nearly 230 potential bidders and ultimately producing only one qualified offer.

On June 18, the court approved the RVO transaction between Synaptive and 1001253954 Ontario Inc., which had been designated the successful bidder. The subscription agreement provided for the issuance of new shares to the purchaser free and clear of encumbrances, cancellation of all other equity, and the transfer of excluded assets, liabilities, and contracts into ResidualCo (1001270243 Ontario Inc.). Consideration included C$9.61 million to satisfy court-ordered charges, a minimum US$22.5 million (and up to US$50 million) cash injection for working capital, and rollover notes issued to EDC as DIP lender and to holders of EDC convertible notes.

The RVO structure was chosen to preserve Synaptive’s valuable regulatory licenses and clearances in Canada, the U.S., and the EU, which would have been time-consuming, difficult and risky to transfer under a traditional asset purchase. The purchaser also committed to retaining at least 90% of Synaptive’s existing employees, ensuring continuity for the company’s operations and preserving a highly specialized workforce.

Following the closing of the sale, the CCAA proceedings were terminated and the residual entity, 1001270243 Ontario Inc., was placed into bankruptcy as contemplated by the June 18 order. One unresolved issue remains: whether terminated employees may access the federal Wage Earner Protection Program (WEPP) following an RVO transaction. That question is scheduled to be argued before the court on November 12 (after the appeal in the Valeo Pharma case addressing the same issue) and will be closely watched by the insolvency community.

Professionals: Bricks Damiani is the bankruptcy trustee. Counsel are Torys for the company, McMillan for Richter as former monitor, and Fasken for EDC.