Synaptive: the employer nobody worked for

A reverse vesting order works by division. The parts of a business worth keeping stay in the company; everything else — the contracts nobody wants, the claims nobody can pay — is moved into a second company that exists to hold them. The good company walks out of the courtroom. The other one goes bankrupt.

The question in 1001270243 Ontario Inc., 2026 ONSC 3967 is what that division does to the people on the wrong side of it.

The division, and who ended up where

Synaptive Medical Inc. emerged from CCAA protection by reverse vesting transaction, continuing operations with approximately 81 retained employees. Its unwanted assets and liabilities — including the agreements of 48 employees whose employment had been terminated — were transferred to 1001270243 Ontario Inc., referred to throughout as ResidualCo. ResidualCo is now also bankrupt, per Reasons for Decision of Dietrich J., July 7, 2026, para. 1.

The arithmetic of the split is agreed. Of Synaptive's 137 employees earning income in Canada at the time of the CCAA filing, 81 were retained, 48 were terminated and 8 resigned, per Reasons for Decision of Dietrich J., July 7, 2026, para. 14.

The sequence matters for what follows. The declaration now sought was originally asked for as part of the June 2025 motion to approve the reverse vesting order itself. The Attorney General advised it intended to oppose and had not had time to respond, so that relief was adjourned. The transaction closed on June 26, 2025, vesting the employment contracts and the claims for unpaid wages, vacation pay and termination pay in ResidualCo, which also became a CCAA applicant. ResidualCo became bankrupt on September 3, 2025, per Reasons for Decision of Dietrich J., July 7, 2026, paras. 10–12.

Then the part that is easy to miss. The restructured business — the one the reverse vesting order preserved — "encountered difficulties", and on April 28, 2026, on the application of Export Development Canada, the court appointed Richter Inc. as receiver of Synaptive itself, per Reasons for Decision of Dietrich J., July 7, 2026, para. 13.

Ten months after the surgery, both halves are insolvent.

What was actually at stake

The Wage Earner Protection Program Act pays a capped amount to employees of insolvent employers — a maximum of seven times the maximum weekly insurable earnings under the Employment Insurance Act, which the parties agree is presently $8,844.22 per person, per Reasons for Decision of Dietrich J., July 7, 2026, paras. 2, 18.

The Monitor's assessment of the 48, which the Attorney General did not dispute:

per Reasons for Decision of Dietrich J., July 7, 2026, para. 15.

Divided among 48 people, the disputed amount is roughly $5,700 each. It took from June 2025 to July 2026, four sets of responding records, two books of authorities and a contested hearing to decide it.

The Attorney General's argument, which is not a frivolous one

The relief was supported by the Monitor and by the terminated employees, and opposed by the Attorney General of Canada on behalf of Employment and Social Development Canada, per Reasons for Decision of Dietrich J., July 7, 2026, para. 5.

The objection is structural rather than mean. Neither the Act nor its Regulations defines "employer" or "former employer", per Reasons for Decision of Dietrich J., July 7, 2026, para. 41. And these 48 people never worked a day for ResidualCo. Their employment had already ended when their contracts were moved into it. On the Attorney General's reading, calling that entity their employer empties the word of content — and the public purse pays for a corporate structure the employees had no part in choosing.

Against that sits the purpose the Act states for itself: to provide for payments to individuals in respect of wages owed to them by employers who are insolvent, per Reasons for Decision of Dietrich J., July 7, 2026, para. 17. And the difficulty the reasons identify is that between an asset sale and a reverse vesting order, employees who have lost their jobs have no solvent employer from whom to claim lost wages, per Reasons for Decision of Dietrich J., July 7, 2026, para. 40.