Court weighs disclosure duties of distressed public companies

Summary: In approving Ravelin’s CBCA plan of arrangement, the Court rejected a debentureholder’s attempt to carve out a proposed securities claim from the arrangement release, holding that distressed issuers are not required to provide “blow by blow” disclosure of non-binding restructuring negotiations before a transaction is ready to be announced. The debentureholder alleged that Ravelin should have disclosed an earlier non-binding proposal from Clarke before announcing the final arrangement agreement, but the Court found that the February 20 press release was complete and accurate, that no agreement existed at the time, and that the market already knew Ravelin was in default and exploring strategic alternatives. The Court held…