Romspen Investment Corporation Defends Woodbine Mall Acquisition Via Reverse Vesting Order

Romspen Investment Corporation issued a detailed investor update on May 12, 2026, defending its use of a court-approved reverse vesting order (RVO) to complete an acquisition of Woodbine Mall and pushing back against what it characterized as significant factual inaccuracies in recent media coverage.

The update, addressed to investors in the Romspen Mortgage Investment Fund, came in response to two Globe and Mail articles published April 28 and May 6, 2026, written by reporter Tim Kiladze. Romspen disputed the headlines — which described the firm as buying a "troubled mall" and "owing itself $410 million" — as mischaracterizations of the transaction structure.

What Is a Reverse Vesting Order and Why Did Romspen Use It?

In its investor communication, Romspen explained that a reverse vesting order differs from a standard court-supervised insolvency sale. In a conventional distressed asset sale, a court-appointed receiver or monitor oversees the disposition of a defaulting borrower's assets, and a vesting order conveys title to the purchaser upon closing. Under an RVO, the court instead vests the borrower's unwanted debts and liabilities into a newly formed company, freeing the borrower entity of those obligations. The acquirer then purchases the borrower itself — via share ownership — thereby indirectly gaining control of the underlying assets.

"RVO transactions have become a well-established tool in Canadian insolvency proceedings, supported by a robust and developed body of jurisprudence," the firm stated in its investor letter. Romspen said the decision to pursue an RVO was made after extensive consultation with professional advisors and was driven by tangible financial benefits for fund investors.

Specifically, Romspen cited three advantages of the RVO structure: millions of dollars in tax savings, avoidance of the cost and delay associated with transferring Woodbine's amusement park operating licenses — which the firm described as a material revenue source — and preservation of its existing mortgage on the property. The firm noted that retaining the mortgage provides "meaningful optionality in how future proceeds are distributed and protects against future creditors upon eventual realization."

Romspen Disputes $410 Million Debt Characterization

A central point of contention in the investor update was the Globe and Mail's framing that Romspen "owes itself" $410 million as a result of the RVO. Romspen said it had explained to the reporter prior to publication that it is not uncommon for a secured creditor acquiring a borrower's shares to retain existing debt within the acquired structure, and that "there is nothing novel or extraordinary about this arrangement."

The firm also disputed the suggestion that the RVO structure was motivated by a desire to avoid a markdown on the Woodbine Mall loan's contribution to the fund's net asset value. Romspen stated that the loan's NAV contribution is already "materially lower than the gross debt amount," reflecting a substantial loan loss provision recorded in accordance with accepted accounting practices and supported by a recent independent third-party appraisal. The firm added that management does not override appraised values, which are reviewed by its auditors, and that "the legal method by which loan collateral is acquired has no bearing on this accounting treatment."

Romspen also said the Globe and Mail overstated the Woodbine Mall loan as a proportion of fund assets, noting that the loan is carried on the fund's balance sheet with reference to the appraised value of the underlying real estate — not at the gross contractual debt amount. The firm called this "a meaningful and important distinction that was absent in the reporting."

Woodbine Mall and the Amusement Park Operating Licenses

Woodbine Mall includes an amusement park, which Romspen identified as a material revenue contributor to the property. The firm noted that preserving the amusement park operating licenses was a key consideration in choosing the RVO structure, as transferring those licenses under a conventional vesting order sale would have involved additional cost and delay.

Romspen Raises Concerns About Impact of Incomplete Reporting on Fund Recovery

Beyond the specific factual disputes, Romspen used the investor update to raise a broader concern about the effect of what it described as incomplete or alarmist media coverage on a fund in recovery mode. The firm said it had provided the Globe and Mail reporter with detailed responses to his questions in advance of publication, "much of which did not find its way into the articles."

"Incomplete or alarmist reporting on a fund in recovery can itself become an obstacle that unsettles investors, complicates ongoing negotiations, and consumes management time that is better directed toward managing and protecting your investments," the Trustees of Romspen Mortgage Investment Fund wrote. "That remains our focus."

The firm said it was not seeking to relitigate past coverage but encouraged investors to weigh media reporting against the fuller context provided in direct communications. Romspen committed to continued transparent communication with investors as it works to "unlock this property's value."

Sources

• Romspen Investment Corporation Investor Update – Woodbine Mall (May 12, 2026): https://www.romspen.com/investor-update-woodbine-mall/