Slate Management – Ontario Superior Court finds that a generalized intent to achieve a s. 88(1)(d) bump was a sufficient basis to rectify in order to redo an amalgamation

A purchaser used a newly-formed AcquisitionCo to acquire a Target, and asked for and received a computation from its accounting firm of the amount by which it would be able to bump the assets of the Target under s. 88(1)(d) (although the advice on how to accomplish the bump was quite general), as well as receiving a rep from Target that Target would not do anything to jeopardize the bump. It later learned that it had busted the bump by amalgamating the three corporations in only one amalgamation, rather than using two sequential amalgamations.

Rather surprisingly, a rectification order was opposed by the Crown. Hainey J found that, on this evidence (and even without having received specific advice as to the precise way in which the amalgamations should occur to satisfy s. 88(1)(d)), the parties had a “a continuing specific intention to achieve the amalgamation in accordance with the tax bump rules,” so that a rectification order was granted to Amalco.

Hainey J also made a specific finding that the Fairmont appeal to the Supreme Court of Canada did not justify an adjournment of the application.

Neal Armstrong. Summary of Slate Management Corporation v Canada (Attorney General), 2016 ONSC 4216 under General Concepts – Rectification.