Part 5Loan Relationships
Chapter 6Connected companies relationships: impairment losses and releases of debts
Deemed debt releases on impaired debts becoming held by connected company
F1361AThe corporate rescue exception
(1)
For the purposes of section 361, the “corporate rescue exception” applies if—
(a)
the acquisition is an arm's length transaction,
(b)
there has been a change in the ownership of D at any time in the period beginning one year before, and ending 60 days after, the date of the acquisition,
(c)
it is reasonable to assume that, but for the change in ownership, D would, within one year of the date of the change of ownership, have met one of the insolvency conditions, and
(d)
it is reasonable to assume that, but for the change in ownership, the acquisition would not have been made.
(2)
Subject to subsection (3), section 769 of ICTA (rules for ascertaining change in ownership of company) applies for the purpose of construing a reference in this section to a change in the ownership of a company.
(3)
A reference in this section to a change in the ownership of a company, in the case of a company that is a building society, is a reference to—
(a)
an amalgamation of two or more building societies under section 93 of the Building Societies Act 1986,
(b)
a transfer of all the engagements of one building society to another under section 94 of that Act, or
(c)
a transfer of the whole of the business of a building society to a company under section 97 of that Act.
(4)
Sections 322(6) and 323 (insolvency conditions) apply for the purposes of this section.