Dixie Energy Trust uses s. 86 reorganization to effect de facto liquidation of a cashco

In a tiny but unusual transaction, a public company ("VisionSky," or "VKY") whose only significant asset is cash resulting from a sale of its business over two years ago (i.e., beyond the time limit in draft s. 84(4.1)) is effectively being liquidated into Dixie Energy Trust - which holds US oil and gas exploration assets through an Argent Energy/Meranex Energy structure.

VKY will engage in a plan of arrangement in which its shareholders will exchange their voting common shares for this cash and for new non-voting common shares of VKY(presumably having nominal value).  This is described as a s. 86 reorg - and there's no deemed dividend as there's lots of paid-up capital.  Ignoring convoluted transactions pursuant to which they get rid of those non-voting common shares to Dixie Energy Trust, they then simply transfer that cash under the plan of arrangement to the Trust in consideration for Trust units.

In order that the Canadian holding company through which the Trust holds the US structure will not be "tainted" as non-portfolio property under the "SIFT" taxation rules, the stripped-out VKY corporate shell is to be held by the Trust directly.

Neal Armstrong.  Summary of VisionSky Circular under REIT and Income Fund Acquisitions - Acquisitions of Corporations.