Section 418A | Cases involving host contract

(1)This section applies where the debtor or the creditor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as divided between—

(a)rights and liabilities under a loan relationship (“the host contract”), and

(b)rights and liabilities under one or more derivative financial instruments or equity instruments.

(2)Where the debtor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as so divided, section 418 has effect as if the reference to the loan relationship in subsection (3)(a) were to the host contract.

(3)Where the creditor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as so divided, section 418 has effect as if the reference to the loan relationship in subsection (3)(b) were to the host contract.

(4)In this section “ the debtor ” and “ the creditor ” have the same meaning as in section 418.