Restructuring Business Trusts as Unregistered Companies

Abstract

The use of alterative business forms harks back to the unincorporated joint stock company that was often a partnership with trust characteristics. REITs and business trusts form a large component of the Singapore Exchange but there are issues with their liquidation and restructuring, particularly involving overseas assets. A recent Delaware Chapter 11 case discussed what a business trust is and whether it is a separate entity. In turn, the concept of legal persona has been linked with affirmative asset partitioning by a UK Supreme Court veil piercing case. Such partitioning existed with partnerships and trusts and this was recognised by Victorian legislatures which crafted early company legislation. While Australian courts have focused on winding up trustees as there is no “trust” as such, restructuring poses more problems, especially for REITs with separate custodian-trustees and managers. They could be seen as “unregistered companies” and restructured in a way that paralleled an incorporated company.