a solution to the fact that TC didn't want to oversee an AOC that no longer had Canadian aircraft operating under it.
No, it was because after the First Reserve purchase of CHC from the Dobbin family CHC no longer met the Canadian ownership requirements. CHC was given a 5 year grace period to solve this problem and Cayman registry was their answer.
That is also why CHC Helicopters Canada was formed ( With Mr. Allard as owner) to be able to hold a CDN AOC and work in Newfoundland.