VBI Vaccines: Chapter 15 CCAA Sale and PreHevbrio Recall

VBI Vaccines (Delaware) Inc. and its affiliated foreign debtors filed chapter 15 petitions on July 30, 2024, in the U.S. Bankruptcy Court for the District of Delaware, seeking recognition of a Canadian CCAA proceeding that began the prior day. The debtors described a multi-jurisdictional biopharmaceutical business built around virus-like particle technology and a commercial hepatitis B vaccine marketed as PreHevbrio in the United States, PreHevbri in other markets, and Sci-B-Vac in Israel, with corporate functions in Ottawa, a Cambridge, Massachusetts office for certain officers, Israeli operations through SciVac, and a Netherlands entity holding European marketing authorization. The company summarized the cross-border process in an August 2024 restructuring update. The filing came after liquidity pressure and a decision to run a court-supervised Sale and Investment Solicitation Process under Canadian law, with Ernst & Young Inc. appointed as Monitor. Bankruptcy filings show K2HV provided debtor-in-possession financing initially capped at $2.5 million at 17.5% interest, later amended to $6.9 million with a $7.2 million DIP charge, while the Canadian court authorized a reverse vesting transaction and the Delaware court enforced that order to close a sale of substantially all U.S. assets. The restructuring culminated in a January 3, 2025 sale closing, a November 2024 voluntary recall of all PreHevbrio vaccine tied to the discontinuation of operations, and a March 3, 2025 final decree in the U.S. chapter 15 cases stating that no distributions would be made on account of claims.

The chapter 15 pathway allowed a Canadian restructuring to be recognized and enforced in the United States while keeping the Canadian court as the main forum. The Delaware court entered an interim recognition order on August 2, 2024 and a final recognition order on August 27, 2024 recognizing the Canadian proceeding as a foreign main proceeding and extending automatic stay protections and other relief to U.S. assets. Subsequent U.S. orders enforced amendments to the Canadian DIP facility and the approval and reverse vesting order, including a December 19, 2024 order enforcing the Canadian court's third amended DIP order. By the time the Delaware court entered a final decree in March 2025, the Canadian court had terminated the CCAA proceeding, the reverse vesting sale had closed, and the U.S. chapter 15 cases were closed with proofs of claim deemed of no force and effect.

Debtor(s)	VBI Vaccines (Delaware) Inc. (and related chapter 15 debtors)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-11623-BLS (jointly administered with 24-11625, 24-11626, 24-11627)
Judge	Hon. Brendan Linehan Shannon
Petition Date	July 30, 2024
Foreign Proceeding	Canadian CCAA proceeding (Ontario Superior Court of Justice, Commercial List)
Recognition	Foreign main proceeding (final recognition order entered August 27, 2024)
DIP Facility	Up to $6.9 million (K2HV), with DIP charge up to $7.2 million
Sale Structure	Reverse vesting transaction approved in Canada and enforced in Delaware
Sale Closing	January 3, 2025
Final Decree	March 3, 2025
Industry	Biopharmaceutical / Vaccines

Chapter 15 recognition and cross-border relief

The chapter 15 petitions sought U.S. recognition of the Canadian Companies' Creditors Arrangement Act proceeding and requested the protections that flow from recognition, including the application of stay-like relief to U.S. assets and contracts. The foreign representative supported the petitions through the Baxter declaration, which described the Canadian restructuring framework and the need for coordinated relief to preserve value while a Canadian court-supervised sale process moved forward. The Delaware court entered an interim recognition order that granted provisional relief, including section 362-style protections against enforcement actions and protections against contract termination, and authorized the foreign representative to administer U.S. assets and operate the debtors' business during the recognition period.

The court later entered a final recognition order recognizing the Canadian proceeding as a foreign main proceeding and finding Canada to be the center of main interests. The order granted relief under section 1520 and additional relief under section 1521(a)(7), which allowed application of section 365 in the United States for contract and lease matters. The recognition order also included a standard limitation that non-ordinary-course use or sale of U.S. assets required further court approval, preserving a U.S. court gatekeeping role for significant transactions. The chapter 15 docket shows the court approved joint administration of the related cases and entered an order specifying the form and manner of service for the recognition hearing, reflecting the procedural infrastructure needed for cross-border coordination.

Case administration and notice mechanics. The Delaware court entered a joint administration order to consolidate the chapter 15 cases for procedural purposes and a service order that set the form and manner of notice for the recognition hearing. Those procedural rulings established the notice framework for cross-border relief and made the docket manageable for creditors following multiple affiliated debtors. Later in the case, service affidavits filed by Stretto as the proposed claims and noticing agent documented the service of hearing agendas and final decree materials on parties in interest. These administrative steps did not resolve substantive claims, but they ensured that the Canadian-led process and U.S. enforcement motions were served on U.S. stakeholders throughout the case.

Recognition was not an end in itself. The chapter 15 framework was used to enforce Canadian court orders and to insulate U.S. assets from inconsistent actions while the CCAA court administered the restructuring. The Delaware court entered orders enforcing amendments to the Canadian DIP facility and later enforced the approval and reverse vesting order, approving a sale of substantially all U.S. assets free and clear of liens and claims subject to permitted encumbrances. These enforcement orders effectively aligned the U.S. and Canadian proceedings and ensured the Canadian court's rulings could be implemented across jurisdictions.

Company background and operating footprint

VBI Vaccines described a biopharmaceutical business focused on virus-like particle technology with a commercial hepatitis B vaccine product marketed under multiple brand names. In its chapter 15 filings, the company identified PreHevbrio as its U.S. commercial product, with PreHevbri and Sci-B-Vac used in other markets. The filings described a corporate and administrative base in Ottawa, a Cambridge, Massachusetts office for some officers, Israeli operations through SciVac, and a Netherlands entity holding European marketing authorization. The chapter 15 record also identified the debtor entities in the cross-border group, including VBI Vaccines Inc. (British Columbia parent), VBI Vaccines (Delaware) Inc., Variation Biotechnologies (US) Inc., and VBI Vaccines B.V. (Netherlands), with other affiliates captured in the Canadian case record.

Product and market positioning. The restructuring filings focus on the hepatitis B vaccine platform, and the company's own public updates during the restructuring highlighted the importance of the PreHevbrio franchise in the United States. The company publicly reported the start of the Canadian CCAA proceeding and the U.S. chapter 15 filing in a restructuring update, and the same update was widely disseminated through a Nasdaq press release. Those public communications provide the market-facing context for the chapter 15 filings, while the court declarations supply the operational details.

Operating footprint and legal structure. The debtors' filings describe a multi-jurisdictional footprint that required a cross-border insolvency framework. The Canadian CCAA record listed the core entities and affiliates subject to the Canadian proceeding, while the chapter 15 petitions in Delaware focused on recognition and enforcement of the Canadian orders in the United States. The combination of U.S., Canadian, Israeli, and European operating locations created the need for coordinated relief to prevent conflicting creditor actions and to preserve continuity of operations while a sale process was conducted.

Public market status. The company disclosed that it received a Nasdaq delisting notice in late July 2024 and that its shares were delisted effective August 8, 2024, events that coincided with the start of the CCAA proceeding and the chapter 15 filing. The delisting and restructuring status were covered in the company's own restructuring update and mirrored in the Nasdaq release.

Liquidity pressures and the decision to file under CCAA

The Baxter declaration framed the filing as a response to liquidity pressure and the need for a coordinated restructuring forum that could preserve value while arranging short-term financing and a sale process. The Canadian CCAA proceeding provided that forum, and the declaration explains that the debtors sought runway financing, protection from creditor actions, and a court-supervised Sale and Investment Solicitation Process to explore strategic alternatives. The Canadian court appointed Ernst & Young Inc. as Monitor, a role analogous to a court-appointed overseer that reports to the court, monitors cash flows, and supports the execution of the SISP.

The Canadian proceeding commenced on July 29, 2024, and the next-day chapter 15 filing in Delaware sought U.S. recognition and enforcement of the Canadian proceeding. The company's public communications described the sequence of events and emphasized that the U.S. filing was designed to support the Canadian restructuring. The VBI restructuring update and the Nasdaq press release both noted the July 29 CCAA filing and the July 30 chapter 15 petitions, framing the process as a cross-border restructuring rather than a standalone U.S. chapter 11 case.

CCAA record and debtor scope. The Canadian CCAA record maintained by the Office of the Superintendent of Bankruptcy lists the entities covered by the Canadian proceeding and provides a public record of the case. That CCAA record confirms the presence of the principal debtor entities and affiliates, and it aligns with the entity list reflected in the chapter 15 petitions and declaration. The Canadian record also provides an external anchor for the cross-border scope that the Delaware court ultimately recognized.

DIP financing and stay extensions

The chapter 15 filings and related enforcement motions show a DIP facility negotiated and amended in Canada and enforced in the United States. The initial DIP facility, as described in the Baxter declaration, provided up to $2.5 million of interim financing from K2HV at an interest rate of 17.5% (daily, compounded monthly and payable at maturity). The declaration also described specific maturity triggers that tied the facility to key restructuring milestones.

The Delaware court's role in the DIP process was to give U.S. effect to Canadian orders and protect U.S. assets from actions inconsistent with the Canadian restructuring. Each amendment to the DIP facility was accompanied by an enforcement motion and a Delaware order giving the Canadian amendments full force and effect in the United States. This approach aligned the cash collateral and priority framework across jurisdictions while preserving the Canadian court as the primary forum for approving the financing terms.

Initial DIP maturity triggers. The DIP facility could mature upon the earliest of several events described in the Baxter declaration:

• September 6, 2024
• Termination or lifting of the CCAA stay
• Closing of a SISP sale transaction
• Implementation of a CCAA plan
• Conversion to BIA proceedings
• An event of default and acceleration

Those triggers effectively made the DIP financing a bridge to a near-term sale or plan outcome, with a pricing structure designed for short duration and a liquidation-oriented path.

First and second amended DIP orders. After recognition, the Delaware court enforced Canadian amendments to the DIP facility. The first amended DIP order increased DIP availability to $3.6 million and increased the DIP lender's charge to $3.85 million. The second amended DIP order increased DIP availability to $4.6 million and the DIP lender's charge to $4.85 million, and the order reflected a priority waterfall that placed an administration charge, directors' charge, and a KERP charge ahead of the DIP charge. These amendments indicate a need for additional liquidity as the sale process continued and as the debtors maintained operations across jurisdictions.

Third amended DIP order and stay extension. In late November 2024, the Canadian court entered a third amended DIP order that increased DIP availability to $6.9 million and increased the DIP lender's charge to $7.2 million. The motion seeking U.S. enforcement stated that the DIP increase was intended to fund cash flows for an extended stay period and that the Canadian order extended the CCAA stay to January 31, 2025. The foreign representative asked the Delaware court to enforce that Canadian order through a chapter 15 enforcement motion, and the U.S. court granted that request in a December 19, 2024 enforcement order, giving the Canadian order full force and effect in the United States and making the relief immediately effective.

Why the amendments mattered. The DIP amendments trace a financing path that expanded the available bridge funding as the sale process progressed. Each amendment had the effect of increasing the priority charge and aligning the U.S. protections with the Canadian order. The third amended DIP order in particular tied the financing increase to the extended stay period, signaling that the debtors expected to remain in CCAA protection through the end of January 2025 while finalizing the reverse vesting transaction and winding down operations.

Reverse vesting sale and Canadian order enforcement

The restructuring outcome was implemented through a reverse vesting transaction approved by the Canadian court and enforced in Delaware. The Delaware court entered an order enforcing the approval and reverse vesting order on November 20, 2024, giving full effect to the Canadian approval order in the United States and approving the sale of substantially all U.S. assets free and clear of liens, claims, and encumbrances other than permitted encumbrances. The order included section 363(m) good-faith purchaser findings and waived the Rule 6004(h) stay, enabling immediate effectiveness.

The Delaware order served the function of a U.S. sale order even though the Canadian reverse vesting order was the operative transaction document. The free-and-clear relief and the good-faith purchaser findings provided protection against later challenges to the sale in U.S. courts, and the waiver of the Rule 6004(h) stay allowed the transaction to become effective without delay. This alignment between the Canadian approval order and the U.S. enforcement order was central to closing the sale across jurisdictions.

Reverse vesting mechanics. The sale structure described in the Delaware order is a reverse vesting arrangement in which unwanted liabilities are moved into residual entities while the purchaser acquires the ongoing business through the target entity. The order reflects steps including the cancellation of existing equity (other than a retained VBI Delaware share), issuance of subscription shares to the purchaser, transfer of the retained VBI Delaware share, transfer of excluded assets and excluded liabilities to residual entities in exchange for promissory notes, and the transfer of purchased assets and assumed contracts to VBI Delaware or a designated nominee. The structure allowed the purchaser to obtain the business and key assets while leaving excluded liabilities in a separate residual structure.

Consideration and retention funding. The order references multiple consideration components, including payments held by the Monitor, subscription prices for new company shares and a VBI Canada share, and a VBI Delaware share purchase price. It also provides that, if a VBI Delaware nominee was not designated, the transaction included a $20 million capital contribution or release component plus a $10,000 cash payment. The order also directed funding for a key employee retention program of up to $679,005 in the aggregate, providing additional insight into the costs of maintaining staff through the transaction.

PreHevbrio withdrawal and U.S. wind-down

By November 2024, the company announced a voluntary nationwide recall of all PreHevbrio vaccine in connection with the discontinuation of operations. The company stated that it was rapidly winding down U.S. operations and permanently ceasing distribution of PreHevbrio. The recall announcement was issued in a VBI press release and repeated in a Business Wire release.

The Business Wire release also reported that VBI communicated to healthcare providers and the FDA on October 25, 2024 regarding its intent to withdraw PreHevbrio from the U.S. market, a step that preceded the formal recall announcement. The timeline of the withdrawal and recall provides a public-facing marker of the wind-down that corresponded with the Canadian sale process and the eventual January 2025 closing. These public statements provide context for the operational changes that occurred alongside the court-supervised restructuring.

Case resolution and U.S. closing orders

The foreign representative's final report indicated that the reverse vesting sale closed on January 3, 2025 and that the Canadian court entered a CCAA termination order on January 31, 2025. Those developments cleared the way for closure of the Delaware chapter 15 cases. The Delaware court entered a final decree on March 3, 2025 recognizing the CCAA termination order and closing the chapter 15 cases, with the order stating that there would be no distributions on account of claims in the chapter 15 cases and that proofs of claim filed in those cases are of no force and effect.

The motion for a final decree and accompanying final report documented the enforcement milestones and presented the closure sequence to the Delaware court, including the sale closing and the Canadian termination order. That final report established the factual basis for ending the chapter 15 cases and confirmed that the U.S. proceeding was not intended to administer distributions. The Delaware court's final decree reinforced that conclusion by stating that any proofs of claim filed in the chapter 15 cases were of no force and effect, a provision that underscores the recognition-only purpose of the U.S. docket.

Key milestones. The cross-border sequence reflects the arc of a CCAA sale process supported by U.S. recognition orders:

The final decree made clear that the chapter 15 cases were closed as an enforcement and recognition vehicle rather than as a distribution forum, and that creditor recoveries would be addressed, if at all, in the Canadian proceeding and sale process.

Frequently Asked Questions

What is VBI Vaccines and what did it sell?

VBI Vaccines described a biopharmaceutical business based on virus-like particle technology with a commercial hepatitis B vaccine product marketed as PreHevbrio in the United States, PreHevbri in other markets, and Sci-B-Vac in Israel. The chapter 15 filings describe a multi-jurisdictional footprint with corporate functions in Ottawa, a Cambridge, Massachusetts office for certain officers, Israeli operations through SciVac, and a Netherlands entity holding European marketing authorization. The Canadian case record and the chapter 15 declaration list the core debtor entities across those jurisdictions.

Why did the company use chapter 15 instead of a U.S. chapter 11?

The debtors filed under chapter 15 because the main restructuring proceeding was a Canadian CCAA case that began on July 29, 2024. Chapter 15 is designed to recognize foreign insolvency proceedings and to provide U.S. relief that supports a foreign main case. The Delaware court entered recognition orders that protected U.S. assets and allowed the foreign representative to enforce Canadian orders in the United States, including DIP amendments and the reverse vesting sale approval.

What is the relationship between CCAA and chapter 15 in this case?

The CCAA proceeding was the primary restructuring forum, with the Canadian court supervising the sale process, approving DIP financing, and issuing the reverse vesting order. The chapter 15 case in Delaware recognized the Canadian proceeding as a foreign main proceeding and gave U.S. effect to the Canadian orders. That structure allowed a Canadian sale order and DIP amendments to be implemented with U.S. court protection for assets and contracts.

What were the key DIP financing terms?

The initial DIP facility provided up to $2.5 million from K2HV at 17.5% interest, with maturity triggers tied to a near-term sale or plan outcome. The facility was increased to $3.6 million and then $4.6 million through Canadian amendments enforced in Delaware, with the DIP charge rising to $4.85 million and ranking behind an administration charge, directors' charge, and KERP charge. The Canadian court later approved a third amended DIP order raising availability to $6.9 million and the DIP charge to $7.2 million, and the Delaware court enforced that order on December 19, 2024.

What is a reverse vesting transaction and how was it used here?

The reverse vesting order approved in Canada and enforced in Delaware structured the sale by keeping the operating entity and transferring unwanted liabilities to residual entities. The Delaware order describes cancellation of existing equity (other than a retained VBI Delaware share), issuance of subscription shares to the purchaser, and transfer of excluded assets and liabilities to residual entities, while purchased assets and assumed contracts were transferred to VBI Delaware or a designated nominee. The structure allowed the purchaser to acquire the ongoing business without assuming excluded liabilities.

What happened to PreHevbrio and U.S. operations?

VBI announced a voluntary nationwide recall of all PreHevbrio vaccine and stated that it was discontinuing operations and permanently ceasing distribution of the product. The recall announcement was issued in a VBI press release and reiterated in a Business Wire release, which also noted an October 25, 2024 communication to the FDA and healthcare providers regarding intent to withdraw PreHevbrio from the U.S. market.

What did creditors receive in the chapter 15 cases?

The Delaware final decree states that there would be no distributions on account of claims in the chapter 15 cases and that any proofs of claim filed in those cases were of no force and effect. The chapter 15 proceedings functioned as a recognition and enforcement vehicle for the Canadian restructuring, rather than a U.S. claims distribution process.

What were the major case milestones?

Key milestones include the July 29, 2024 CCAA filing, the July 30 chapter 15 petitions, interim recognition on August 2, final recognition on August 27, enforcement of DIP amendments in October and December, enforcement of the reverse vesting order on November 20, the January 3, 2025 sale closing, the January 31 Canadian termination order, and the March 3, 2025 final decree closing the Delaware cases. The sequence reflects a Canadian-led sale process supported by U.S. recognition and enforcement orders.

Who is the claims agent for VBI Vaccines (Delaware) Inc.?

Stretto serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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