Section 249 | When value is received

(1)For the purposes of this Chapter the investor receives value from the CDFI at any time when the CDFI—

(a)repays, redeems or repurchases any securities or shares included in the investment,

(b)releases or waives any liability of the investor to the CDFI or discharges, or undertakes to discharge, any liability of the investor to a third person,

(c)makes a loan or advance to the investor which has not been repaid in full before the investment is made,

(d)provides a benefit or facility for—

(i)the investor or any associate of the investor, or

(ii)a director or employee of the investor or any associate of a director or employee of the investor,

(e)disposes of an asset to the investor for no consideration or for a consideration of an amount or value which is less than the market value of the asset,

(f)acquires an asset from the investor for a consideration of an amount or value which is more than the market value of the asset, or

(g)makes a payment to the investor other than a qualifying payment.

(2)But if the investor is a bank, the investor does not receive value from the CDFI when the CDFI makes a deposit with the investor in the course of the CDFI's ordinary banking arrangements with the investor.

(3)For the purposes of subsection (1)(b) the CDFI is treated as having released or waived a liability if the liability is not discharged within 12 months of the time when it ought to have been discharged.

(4)For the purposes of subsection (1)(c) the following are treated as loans made by the CDFI to the investor—

(a)the amount of any debt due from the investor to the CDFI (other than an ordinary trade debt), and

(b)the amount of any debt due from the investor to a third person which has been assigned to the CDFI.

(5)For the purposes of this section—

(a)references to a debt or liability do not, in relation to a person, include references to any debt or liability which would be discharged by the making by that person of a qualifying payment,

(b)references to a benefit or facility do not include references to any benefit or facility provided in circumstances such that, if a payment had been made of an amount equal to its value, that payment would have been a qualifying payment, and

(c)any reference to a payment or disposal to a person includes a reference to a payment or disposal made to that person indirectly or to that person's order or for that person's benefit.

(6)In subsection (5) references to “a person” include references to any other person who, at any time in the 6 year period, is connected with that person, whether or not the other person is so connected at the material time.

(7)In this section—

“bank” has the meaning given by section 1120,

“qualifying payment” means—

(a)any payment by any person for any goods, services or facilities provided by the investor (in the course of the investor's trade or otherwise) which is reasonable in relation to the market value of those goods, services or facilities,

(b)the payment by any person of any interest which represents no more than a reasonable commercial return on money lent to that person,

(c)the payment by any company of any dividend or other distribution which does not exceed a normal return on any investment in shares in or securities of that company,

(d)any payment for the acquisition of an asset which does not exceed its market value,

(e)the payment by any person, as rent for any property occupied by the person, of an amount which is not more than a reasonable and commercial rent for the property, and

(f)a payment in discharge of an ordinary trade debt, and

“ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business if any credit given—

(a)is for not more than 6 months, and

(b)is not longer than that normally given to customers of the person carrying on the trade or business.