preliminarily to butterfly transactions involving a CCPC (DC) whose individual shareholders are implementing a settlement agreement in respect of an oppression remedy brought by some of the individual shareholders (H to M, who act as a group): Mr. A (a major shareholder of DC), Mrs A and Mr G are paid retiring allowances; and various of the individual shareholders who are not specified shareholders elect to cash out substantially all their interest in DC by electing to receive a substantial cash dividend (including a capital dividend) on their shares (representing most of the value of those shares) with those shares then being converted into Class B Freeze shares having a nominal value.
In the first gross asset butterfly transaction, DC transfers a portion of each of its three types of property: to a subsidiary (Subco A) of a TC for Mr A (Transferee A), with Subco A then being wound up into Transferee A; and to a TC for G to M (Transferee Z). DC then is dissolved. In the second gross asset butterfly, Transferee Z (now referred to as DC2) transfers a portion of each of its three types of property to TCs for each of its individual shareholders (or a TC (Transferee N) with nominal value for the shareholders of DC who elected to be cashed out).
The liabilities assumed on the butterfly transfers to and by Transferee Z include contingent environmental liabilities (para. 37, 80).