After growing rapidly, our client—a large distributor of lumber and building materials in the US—controlled an organization that included more than 150 separate legal entities, including corporations, limited liability companies, partnerships and business trusts. These operating companies conducted business across multiple states, and each one had its own employees and corporate assets.
In 2022, the organization’s leadership identified an opportunity to improve transparency, corporate governance and risk management by reducing the overall number of legal entities in the corporate structure, consolidating the ownership of assets and streamlining operations.
The client and its advisory firm developed an implementation step plan to merge or liquidate the redundant legal entities and consolidate assets. In late September 2022, they brought on a cross-practice McDermott team to develop a legal implementation plan, identify and resolve any related legal issues, and execute on the plan in conjunction with our client and its advisory firm.
The entire transaction, including the merger of the legal entities and consolidation of assets, was set to be effective from January 1, 2023. Knowing that the client and its advisory firm would be out of the office during the end of the year, the McDermott team had just a few weeks to deliver results.
Leaning on guidance provided by the McDermott team, the client successfully closed its restructuring transaction on December 31, 2022.
McDermott’s Tax and Corporate Transformation Services Groups closely worked with the client and its external advisory firm to identify legal issues, overcome business hurdles and finalize a legal implementation plan. McDermott’s tax team provided invaluable support in deploying the client’s new business operating model by drafting inter-company agreements, reviewing tax calculations prepared by the client and its advisory firm and implementing asset transfers in a tax-efficient manner.
McDermott’s IP and Employment Practice Groups were also brought in to review and address issues relating to IP asset migration, employee transfers and pension plan rollovers. And the Corporate Transactions Group handled more than 184 legal entity mergers, liquidations and consolidations by the client’s deadline.
The team worked seamlessly across practices to coordinate the timely delivery of corporate, tax, IP and employment services to help our client achieve its business objectives on an expedited schedule.
Learn more about our Corporate Transformation Services capabilities.