Our client was the Responsible Entity for a Real Estate Investment Trust. The Trust was subject to a winding up application by one of the major shareholders. The major shareholder was the tenant of all the assets of the Trust. Our client required an expert opinion as to whether the winding up proposal was in the best interests of all unitholders. Our path of work included:
- Meeting with management to understand the financial position and operational nature of the Trust;
- Helping the Responsible Entity communicate with the major shareholder to understand the motivations behind the winding up application;
- Considering the events that would occur in a forced wind-up scenario under time pressure; and
- Comparing the forced wind-up scenario to a situation whereby the trust could sell its assets without the pressure of a wind-up order.
We recommended that the wind-up order was not in the best interests of unitholders as the assets would very likely be sold for less than they would in a stable sale process. Having formed this view, we helped the Responsible Entity avoid the winding up order.