Canada (National Revenue) v Atlas Tube Canada ULC
In 2012, Atlas Tube Canada ULC (Atlas), a private Alberta company, was a subsidiary of a private U.S. company called JMC Steel Group Inc. (JMC). On March 30, 2012, JMC acquired the shares of a public Ontario corporation, Lakeside Steel Inc. (LSI), for $148 million, by way of a plan of arrangement approved by the Ontario Superior Court of Justice. LSI was a holding company which owned two subsidiaries: Lakeside Steel Corporation (LSC), an Ontario company, and Lakeside Steel Holdings USA Inc. (LSU). The purchase transaction included the following pre- and post-acquisition steps:
1.Another amalgamation of LSI to form a new LSI;
2.Transfer of LSU shares by the new LSI to JMC for a stated value of $57 million;
3.Transfer of new LSI shares and debt of $32 million to 6582125 Canada Inc. (658) resulting in a $90 million debt owing by 658 to JMC; and
4.Atlas acquiring the $32 million debt and new LSI shares from 658, and consequently owing $90 million to 658.