Section 362 | Parties becoming connected where creditor's rights subject to impairment adjustment etc

(1)This section applies if—

(a)a company (“D”) is a party to a loan relationship as debtor, and

(b)another company (“C”) which—

(i)is a party to the loan relationship as creditor, and

(ii)is not connected with D,

becomes connected with D, ...

(c)Repealed

(2)C is treated as releasing its rights under the loan relationship when C and D become connected.

(3)The amount treated as released is the amount (if any) by which the pre-connection carrying value in D's accounts exceeds the pre-connection carrying value in C's accounts.

(4)In subsection (3)—

“the pre-connection carrying value in D's accounts” means the amount that would be the carrying value of the liability representing the loan relationship in D's accounts if a period of account had ended immediately before C and D became connected, and

“the pre-connection carrying value in C's accounts” means—

(a)in any case where C was a party to the loan relationship as creditor on the last day of the period of account ending immediately before the one in which C and D became connected, the cost of the asset representing the loan relationship which would be given on that day on an amortised cost basis of accounting, and

(b)in any other case, the amount or value of any consideration given by C for the acquisition of the asset representing the loan relationship.

(5)For the purposes of subsection (4) no account is to be taken of—

(a)accrued amounts, or

(b)amounts paid or received in advance, ...

(c)Repealed

(6)Subsections (2) and (3) are subject to section 362A (corporate rescue: debt released shortly after connection arises).