Section 548 | Meaning of debtor repo

(1)For the purposes of this Chapter a company (“the borrower”) has a debtor repo if each of conditions A to E is met.

(2)Condition A is that under an arrangement the borrower receives from another person (“the lender”) any money or other asset (“the advance”).

(3)Condition B is that, in accordance with generally accepted accounting practice, the accounts of the borrower for the period in which the advance is received record a financial liability in respect of the advance.

(4)Condition C is that under the arrangement the borrower sells any securities at any time to the lender.

(5)Condition D is that the arrangement makes provision conferring a right or imposing an obligation on the borrower to buy those or similar securities at any subsequent time.

(6)Condition E is that, in accordance with generally accepted accounting practice, the subsequent buying of those or similar securities would extinguish the financial liability in respect of the advance recorded in the accounts of the borrower.

(7)For the purposes of conditions A to E references to the borrower include a firm of which the borrower is a member.