a limited partnership ("BForLP") owns substantially all of the membership interests in a (presumably Netherlands) holding cooperative which owns all the shares of a non-resident corporation ("BForHoldco") which holds all of the shares of a taxable Canadian corporation ("BCo") which holds a majority of the voting common shares (Class B shares) of another taxable Canadian corporation ("Opco") with the balance of the common shares (Class A shares) and preferred shares being owned by a taxable Canadian corporation ("ACo") with which BCo deals at arm's length.
BForLP uses the proceeds of a daylight loan to make an interest-bearing loan (the "Sub Debt") to BCo, with BCo using the lent money to distribute paid-up capital (used by BCo for an income-producing purpose) to BForHoldco, and so on up the chain so that BForLP can fund the repayment of its daylight loan. BForHoldco then transfers its B shares to Opco in consideration for the issue of shares of a new class of common shares of Opco (with this "tuck-under" transaction not being ruled on), Aco effects a simultaneous s. 86 exchange of its shares in Opco (so as to preclude the tuck-under transaction giving rise to an acquisition of control of Opco by Aco), and BCo and Opco then amalgamate by way of a vertical short-form amalgamation.
Ruling that s. 87(2.11) will apply to the amalgamation.