Chesswood: Chapter 15 Enforces Canadian Vesting Orders for Asset Transactions

Chesswood Group Limited’s U.S. bankruptcy case is not a chapter 11 reorganization; it is a chapter 15 recognition proceeding used to protect and implement a Canadian court-led liquidation path. Chesswood, a Canadian specialty finance platform spanning U.S. small-ticket equipment finance and Canadian consumer auto finance, entered CCAA proceedings in Ontario on October 30, 2024 and sought same-day U.S. chapter 15 recognition in Delaware as its lender syndicate moved to enforce security after borrowing base deficiencies and covenant failures (Newswire CCAA announcement and the Canadian government’s CCAA records entry). Bankruptcy filings describe a compressed, lender-driven trajectory: a secured revolving facility that was originally US$300 million, a borrowing base deficiency that grew into a US$92 million breach, successive waivers that expired in October 2024, and a chapter 15 posture aimed at preventing U.S. disruption while the Canadian monitor ran a sale/investment solicitation process (bankruptcy filings).

For restructuring professionals, Chesswood is a good case study in “cross-border execution” rather than balance-sheet recapitalization. The U.S. court’s primary role was to recognize the Canadian proceeding as a foreign main proceeding and to extend stay-like protections and asset entrustment relief in the United States so that Canadian vesting orders could be recognized and enforced for transactions with U.S.-connected assets, counterparties, and liens. The docket then becomes transaction-focused: a reverse vesting sale of the Pawnee platform to North Mill Equipment Finance that closed on April 1, 2025, followed by a smaller “ResidualCo” asset monetization tied to a Bishop-related joint venture interest in mid-2025 (bankruptcy filings; closing discussed in deBanked and advisor reporting in Oaklins).

| --- | --- | | Debtor / foreign proceeding | Chesswood Group Limited et al. (CCAA) with U.S. chapter 15 recognition (bankruptcy filings; Canadian CCAA record) | | U.S. court | U.S. Bankruptcy Court, District of Delaware (bankruptcy filings) | | U.S. case number | 24-12454 (CTG) (bankruptcy filings) | | U.S. judge | Craig T. Goldblatt (bankruptcy filings) | | U.S. petition date | 2024-10-30 (bankruptcy filings; Newswire) | | Canadian main proceeding | Ontario Superior Court of Justice (Commercial List) (CCAA) (Newswire) | | Monitor / foreign representative | FTI Consulting Canada Inc. (monitor) (bankruptcy filings; Newswire) | | Platform footprint (as described) | Specialty finance across equipment, vehicle, and legal financing; key operating arms included Pawnee (U.S.) and Rifco (Canada) (bankruptcy filings) | | Employees (as described) | ~166 total (~90 Canada / ~76 U.S.) (bankruptcy filings) | | Secured facility (high level) | Revolving senior secured facility originally US$300M; borrowing base deficiency escalated (bankruptcy filings; Newswire) | | Chapter 15 purpose (high level) | Recognition of Canadian main proceeding; U.S. stay/entrustment relief; recognition/enforcement of Canadian vesting orders (bankruptcy filings) | | Key transactions recognized in U.S. | Pawnee reverse vesting sale; Bishop residual asset transaction + charge-off settlement amendment (bankruptcy filings) | | Pawnee outcome (public framing) | North Mill Equipment Finance closed Pawnee acquisition April 1, 2025; combined gross receivables exceeded $2B (buyer framing) (deBanked and Oaklins) |

Table: Case Snapshot

Chapter 15 Recognition and Canadian CCAA Sale Process: Pawnee Reverse Vesting and Follow-On Asset Monetizations

Platform map: what Chesswood owned and why the business mix mattered. Chesswood operated as a specialty finance “house of brands” with different underwriting engines and different funding constraints. Bankruptcy filings describe a platform spanning equipment financing, vehicle financing, and legal-sector finance, with the most transaction-relevant subsidiaries being Pawnee Leasing Corporation (U.S. equipment finance) and Rifco National Auto Finance Corporation (Canadian auto finance) (bankruptcy filings). Public releases show Chesswood had also been active in portfolio reshaping before the CCAA filing, including selling its majority stake in Vault Credit/Vault Home Credit in August 2024 and applying proceeds to reduce credit facility debt (Newswire strategic review update and deal coverage in MonitorDaily).

The reason this matters in a cross-border insolvency is that each operating platform can have its own funding structure and covenants. Pawnee, in particular, was described in bankruptcy filings as operating alongside securitization arrangements and structured finance agreements that place strict constraints on how assets can be transferred and how titles and servicing rights can be moved (bankruptcy filings). In distressed finance platforms, “transferability” is often the controlling variable: the best headline price is meaningless if the deal cannot close without triggering securitization defaults or requiring months of operational re-titling work.

Capital structure trigger: borrowing base deficiency turned a revolver into a restructuring clock. The CCAA filing announcement described a US$300 million revolving senior secured credit facility and stated Chesswood disclosed covenant non-compliance and borrowing base issues months before the filing, with waivers granted and later expiring before lenders demanded repayment and issued a notice of intention to enforce security (Newswire CCAA announcement). Bankruptcy filings add the restructuring mechanics: the facility was originally US$300 million (including a swingline component), it was reduced to US$148 million by August 2024, and the borrowing base deficiency escalated into a US$92 million breach (after initially being calculated at approximately US$50 million), followed by continuing events of default after waiver expiry in October 2024 (bankruptcy filings).

This is a classic “borrowing base-driven insolvency” pattern for specialty lenders: when the borrowing base collapses (because collateral is re-valued, audited, impaired, or re-characterized), the lender is no longer funding at the prior advance rate and the debtor cannot refinance quickly because the collateral is the business. Once the lender syndicate stops supporting waivers, the feasible outcomes narrow to (i) a court-supervised sale process that preserves collateral value or (ii) a disorderly enforcement path with value-destructive collection actions.

Why chapter 15 mattered even when Canada was “the main case.” A common misconception is that chapter 15 is a “paper filing.” In practice, it is a tool to prevent U.S. creditor actions from undermining a Canadian (or other foreign) court-supervised process and to allow foreign court orders to be recognized and enforced in the United States. Chesswood’s U.S. docket reflects exactly that function: provisional relief at the outset, recognition of a foreign main proceeding, and later recognition/enforcement orders tied to specific transactions and vesting orders (bankruptcy filings).

In the Chesswood case, the functional needs are straightforward:

• Stop U.S. seizures, setoffs, and contract terminations while the Canadian monitor runs a sale process (bankruptcy filings).
• Entrust U.S.-territorial assets and administration to the foreign representative so the process is centralized and predictable (bankruptcy filings).
• Recognize and enforce Canadian vesting orders so U.S.-connected assets, liens, and counterparties can be cleanly transferred free and clear consistent with the Canadian court’s orders (bankruptcy filings).

Provisional relief to bridge the gap before recognition. Chapter 15 does not automatically impose the full chapter 11 stay at filing. Bankruptcy filings in this case emphasized that point and sought provisional relief under section 1519 pending recognition, including application of section 362 stay protections, section 365(e)-style contract protections, and entrustment of U.S. assets to the foreign representative. The motion also sought recognition/enforcement of the Canadian initial order on a provisional basis and highlighted financing protections tied to Canadian DIP borrowings (bankruptcy filings). This is a key cross-border execution point: if provisional relief is not obtained quickly, U.S.-based counterparties can take actions that are difficult to unwind later even if the foreign main proceeding is ultimately recognized.

Foreign main recognition: what the U.S. court actually granted. The recognition order recognized the Canadian proceedings as foreign main proceedings, recognized the monitor as the foreign representative, and granted relief under section 1520 that made the section 362 stay applicable to U.S.-territorial assets. The order also granted additional relief under section 1521, including injunctions to prevent interference with the Canadian administration, entrustment of U.S. assets, and making section 365(e) applicable (nunc pro tunc to the petition date) (bankruptcy filings).

The following table frames those orders the way deal teams often experience them: as “permissions” and “shields” that make closing transactions possible across borders.

Canadian SISP as the core monetization engine. Public materials show the Canadian monitor ran (or at least publicly announced) a sale and investment solicitation process (SISP) with defined deadlines and a broad invitation for asset sales, investments, recapitalizations, or refinancing proposals (PRNewswire SISP announcement). Bankruptcy filings frame the U.S. chapter 15 process as support for that Canadian-led SISP and for subsequent vesting orders implementing transactions (bankruptcy filings). For professionals, this is an important lens: the primary value realization work occurred in Canada; the U.S. court’s role was to keep the U.S. perimeter stable and then to recognize Canadian orders when it was time to execute transactions.

Pawnee transaction: why a reverse vesting structure can be the “least-bad” closing solution. The Pawnee sale is the center of gravity in the U.S. chapter 15 docket. Public reporting described North Mill Equipment Finance acquiring Pawnee and framed the combined platform as exceeding $2 billion of gross receivables, with significant workforce transition and rapid closing after court approval (deBanked and Oaklins). Bankruptcy filings describe a reverse vesting transaction structure designed to preserve securitization and structured finance arrangements: the buyer acquires equity of Pawnee and Tandem (the “Purchased Companies”), while excluded assets and liabilities are vested into a newly formed residual entity (ResidualCo), allowing the core platform to transfer without re-titling friction (bankruptcy filings).

The operational reason is the kind practitioners encounter repeatedly in finance-company sales: securitizations often require that titles remain where they are and that servicing and asset ownership chains are not disrupted in ways that could trigger defaults. Filings described that alternative structures could have required months of re-titling work across 49 states and significant costs, while also preventing immediate securitization of retained originated assets. A reverse vesting transaction is essentially a “surgical” way to transfer the platform while pushing unwanted or non-transferable exposures into a residual bucket that stays behind (bankruptcy filings).

How the proceeds waterfall signaled recoveries. One of the most important “professional” takeaways is that the docket itself indicated where value was going. The Pawnee motion described a waterfall in which aggregate cash proceeds were to be distributed to the DIP agent (for DIP lenders) and then, as applicable, to the pre-filing agent (for existing lenders), and it stated that cash proceeds were significantly less than the secured obligations such that other creditors were not entitled to proceeds (bankruptcy filings). That is an explicit signal that the case was a secured-creditor monetization process, not a stakeholder reallocation process. When that dynamic exists, the primary contest tends to shift from “who gets value” to “how is value preserved and transferred without leakage.”

U.S. recognition order for Pawnee: free-and-clear and good-faith protections. The U.S. order recognizing and enforcing the Pawnee vesting order is the closing “bridge” in chapter 15: it gives the Canadian vesting order effect in the U.S. territory, authorizes the sale/transfer free and clear with the usual section 363(f) findings, and includes good-faith purchaser and non-collusion findings that provide section 363(m)-style protections (bankruptcy filings). For deal certainty, those protections matter even when the main proceeding is Canadian, because U.S. counterparties and lienholders are more likely to accept transfers when the U.S. court has blessed the free-and-clear and good-faith structure.

Closing posture and why the chapter 15 cases were later closed. A chapter 15 case is supposed to end when its purpose is fulfilled. Bankruptcy filings state that after the Pawnee transaction closed on April 1, 2025, the foreign representative sought to close the chapter 15 cases for Pawnee Leasing Corp. and Tandem Finance Inc. on the basis that the purpose of the chapter 15 appearance had been completed and the cases were fully administered (bankruptcy filings). This is an underappreciated point: chapter 15 is often “transactional.” Once the key cross-border transfers are complete, leaving the U.S. case open can add cost without adding protection.

Bishop transaction: residual value monetization plus a structured payment settlement. After the Pawnee closing, the docket shows a smaller but analytically interesting follow-on transaction that monetized residual assets held in ResidualCo. Bankruptcy filings describe a transaction for a Bishop-related equity interest and an assigned contract, with a purchase price of US$1,218,917.36 and proceeds directed to the pre-filing lenders as partial repayment under the existing credit agreement (bankruptcy filings). That transaction also incorporated a “charge-off settlement” that amended the Pawnee sale agreement by terminating further charge-off payment obligations in exchange for a one-time settlement amount of US$1,615,188.22 (less certain April–June 2025 payments already made), and the U.S. recognition order expressly amended the Pawnee vesting order to reflect that settlement (bankruptcy filings).

For professionals, the useful point is not the dollar size; it’s the mechanism. The charge-off settlement shows how post-closing economic adjustments can still be negotiated and implemented through court orders when legacy agreements include contingent payment structures. In finance-company sales, contingent earnouts or servicing-based payment obligations can create ongoing disputes. A negotiated settlement that caps and terminates those obligations can be value-preserving if it reduces post-closing friction and prevents a long tail of reconciliation litigation.

Governance and disclosure issues: why reporting disruptions mattered to lenders. Public materials around Chesswood’s CCAA filing described a failure-to-file cease trade order from the Ontario Securities Commission and board and CFO resignations in the months leading up to the filing (Newswire CCAA announcement). Those governance events matter in lender-driven restructurings because they can reduce the lender group’s tolerance for continued waivers: if reporting is unreliable or delayed, borrowing base verification becomes more difficult and lenders may prefer a controlled sale process to ongoing operating risk. Additional reporting described executive and management shifts during the strategic review period (TipRanks summary).

The governance and reporting timeline described in public releases is unusually stark for a specialty finance issuer because it combines covenant stress with public-market impairment. The CCAA announcement described (i) a June 2024 disclosure of borrowing base non-compliance and waivers, (ii) an August 2024 cease trade order tied to a failure to file required disclosure, and (iii) a late-October lender demand and notice of intention to enforce security, alongside resignations at the board and CFO level (Newswire). In practice, those events can accelerate a move from “amend-and-extend” to “sale-and-enforce” because they reduce the lender group’s confidence that operational improvements or refinancing can be executed with adequate disclosure hygiene.

Canadian DIP and the reason it shows up in U.S. chapter 15 papers. The chapter 15 docket is not “about DIP financing” in the chapter 11 sense, but the provisional relief motion still highlighted Canadian DIP borrowings because liquidity is the immediate stabilizer in any creditor-enforced process. Bankruptcy filings describe provisional recognition and enforcement of the Canadian initial order and reference interim DIP borrowings authorized up to US$18.5 million, together with a DIP charge granted in Canada to secure those borrowings (bankruptcy filings). The practical reason a foreign representative asks a U.S. court to recognize those features pending recognition is to avoid a cross-border mismatch: if a lender or counterparty can attach U.S.-territorial assets while the Canadian DIP lenders are funding to preserve enterprise value, the DIP may be effectively subsidizing value leakage to opportunistic U.S. creditors. For finance platforms with U.S. contracts, servicing operations, or bank accounts, that mismatch risk is not theoretical.

Why “entrustment” is often the key chapter 15 tool for transactions. Bankruptcy filings describe entrustment relief as establishing the foreign representative as the exclusive representative of the debtors in the United States and authorizing administration or realization of U.S.-territorial assets by the foreign representative (bankruptcy filings). In transaction-driven chapter 15 cases, entrustment is often the enabling mechanism for: (i) distributing U.S.-connected sale proceeds through the structure mandated by the foreign court, (ii) making U.S. counterparties comfortable that they are dealing with the proper authority, and (iii) minimizing the risk that parallel U.S. proceedings create inconsistent outcomes on liens, setoffs, or contract rights.

Confidentiality and price sealing: why it can be value-preserving in an ongoing SISP. The public SISP announcement described a process inviting offers for complete or partial asset sales and investments, with a deadline-driven framework and a monitor-controlled data room (PRNewswire). Bankruptcy filings similarly emphasize that a sale process can be harmed if sensitive pricing and structure are disclosed while the process is still running, especially when multiple business lines are being evaluated in parallel and bidders could “game” the process by anchoring their bids to disclosed numbers (bankruptcy filings). In that context, sealing purchase price terms is not only a privacy move; it is a negotiation tactic intended to preserve optionality and prevent a failed deal from weakening bargaining position in the next round.

What this case suggests about buyer underwriting in specialty finance acquisitions. The buyer-side commentary around Pawnee emphasized scale, referral-partner positioning, and the rapid timeline from court approval to closing, and it described integration outcomes such as workforce transition and asset refinancing at improved funding costs (deBanked). That framing is consistent with the broader economics of specialty finance M&A: buyers underwrite not only receivables but also the funding stack, the securitization mechanics, and the operational platform that generates new originations and services existing assets. Advisor-side summaries similarly emphasize the profile of the target and the buyer’s origination range (Oaklins). In a creditor-driven process, these considerations are what determine whether “value” is realizable in a cash transaction or whether it remains a theoretical mark.

Key case timeline (U.S. chapter 15 milestones + transaction closings). The following timeline consolidates the “critical path” items for the chapter 15 docket and the transaction endpoints that appear to have driven U.S. court activity.

Frequently Asked Questions

What is Chesswood Group Limited, and what businesses were central to the restructuring? Chesswood operated as a specialty finance platform spanning equipment, vehicle, and other credit products, with U.S. equipment finance through Pawnee and Canadian auto finance through Rifco (bankruptcy filings). Public releases also describe earlier portfolio reshaping steps like the sale of Vault subsidiaries during the strategic review period (Newswire and MonitorDaily).

When did Chesswood file for CCAA protection and U.S. chapter 15 recognition? Chesswood entered CCAA proceedings on October 30, 2024 in Ontario and sought U.S. chapter 15 recognition in Delaware the same day (Newswire and the Canadian government’s CCAA records entry).

Where were the main proceedings pending, and which U.S. court handled chapter 15? The main proceeding was in the Ontario Superior Court of Justice (Commercial List) under the CCAA, and the U.S. chapter 15 case was in the U.S. Bankruptcy Court for the District of Delaware (Newswire).

What were the key drivers of distress? Public filings described covenant non-compliance and borrowing base deficiencies under a revolving senior secured credit facility, followed by enforcement actions and a loss of ongoing lender support (Newswire). Bankruptcy filings describe a borrowing base deficiency that escalated into a ~US$92 million breach and continuing defaults after the final waiver period expired in October 2024 (bankruptcy filings).

What is a chapter 15 “foreign main” recognition order, and what did it do here? In this case, the foreign main recognition order recognized the Canadian proceedings as foreign main proceedings and extended stay-like protections to the debtors’ U.S.-territorial assets, while also granting additional relief to prevent interference with the Canadian administration and to entrust U.S. assets to the foreign representative (bankruptcy filings). That relief created the U.S. “shield” needed to implement Canadian court orders affecting U.S.-connected assets and parties.

What is a reverse vesting transaction, and why was it used for Pawnee? Bankruptcy filings describe the Pawnee sale as a reverse vesting transaction in which the buyer acquires equity of the operating entities while excluded assets and liabilities are vested into a residual entity. Filings tie the structure to securitization constraints and to the need to avoid re-titling friction that could delay closing and risk defaults under structured finance arrangements (bankruptcy filings). In practical terms, it was a closing solution tailored to a finance-company balance sheet.

Who acquired Pawnee and how large was the combined platform after closing? Buyer-side reporting described North Mill Equipment Finance acquiring Pawnee and stated the combined portfolio’s gross receivables exceeded $2 billion after closing (deBanked and Oaklins).

How were transaction proceeds intended to be distributed among DIP and prepetition lenders? Bankruptcy filings describe proceeds from the Pawnee transaction flowing first to the DIP agent for DIP lenders and then, as applicable, to the pre-filing agent for existing lenders. Filings also describe proceeds from the Bishop transaction being distributed to pre-filing lenders through the pre-filing agent as partial repayment (bankruptcy filings).

What was the Bishop transaction and what were its key economics? Bankruptcy filings describe a follow-on transaction involving a Bishop-related equity interest and an assigned contract for a purchase price of US$1,218,917.36, along with a charge-off settlement amount of US$1,615,188.22 (less certain prior quarter payments) that amended contingent payment obligations under the Pawnee sale agreement (bankruptcy filings).

When did the chapter 15 cases close, and what filings marked the wind-down? Bankruptcy filings describe closing the chapter 15 cases for Pawnee Leasing Corp. and Tandem Finance Inc. after the Pawnee transaction closed, on the basis that the purpose of the chapter 15 appearance had been completed and the cases were fully administered (bankruptcy filings).

Who is the claims/noticing agent for the U.S. chapter 15 cases? Bankruptcy filings in the Delaware chapter 15 docket reflect Epiq Corporate Restructuring, LLC handling noticing and related claims administration functions for the U.S. case (bankruptcy filings). Parties should follow the official notices issued in the chapter 15 docket rather than relying on third-party docket sites.

For more analysis of chapter 11 cases and restructuring developments, explore the ElevenFlo bankruptcy blog.