A client runs a successful trading company that has four branches, all run via the one company, which is 100% owned by a holdco. They have been made an offer for the trading company, but for legal reasons (in connection with the monopolies commission I understand) the buyer is only able to acquire three of the four branches. The current deal is that the buyer will take on the three branches if the existing owners of the company 'agree' to retain the fourth branch and run it themselves.
The specifics of how this will achieved have yet to be ironed out, but it is likely it will involved hiving off the trade of the fourth branch in to a separate vehicle so the remainder can be sold. There is also some debate ongoing as to whether a share sale or a trade and assets sale will occur - the buyer is easy either way apparently.
We are looking at the tax implications of both scenarios, but whatever happens, there will be some cash in the tradeco to go up to the holdco. They will then need to either draw down on the funds as dividends or liquidate via an MVL. If they go with MVL of the holdco and retain the fourth branch, do they caught under the fourth condition of the phoenixing rules?
Or, could it be argued that the deal is being done for commercial reasons and if they wish to sell, they have to retain the fourth branch?
While I would like to think this argument might have some legs, I can also see that once hived off from the tradeco, the fourth branch could simply be sold as a separate concern, and that doing so would then resolve the fourth condition issue. I'm not aware of any conditions in the sale agreement that would require them to retain the fourth branch and as mentioned above, the current plan is that they simply retain the fourth branch. Whether this is a pre-requisite of the deal remains to be seen.