Attribution of assets to company’s long-term business
10.—(1) This Rule applies in the case of a company carrying on long-term business if at the liquidation date there are assets of the company in respect of which—
(a)it is not clear from the accounting and other records of the company whether they do or do not represent the fund or funds maintained by the company in respect of its long-term business, and
(b)it cannot be inferred from the source of the income out of which those assets were provided whether they do or do not represent those funds.
(2) Subject to paragraph (6) the liquidator shall determine which (if any) of the assets referred to in paragraph (1) are attributable to those funds and which (if any) are not and those assets shall, for the purpose of the winding-up, be deemed as at the liquidation date to represent those funds or not in accordance with the liquidator’s determination.
(3) For the purpose of paragraph (2) the liquidator may—
(a)determine that some of those assets shall be attributable to those funds and that others of them shall not (the first method); or
(b)determine that a part of the value of one of those assets shall be attributable to those funds and that the remainder of that value shall not (the second method),
and he may use the first method for some of those assets and the second method for others of them.
(4) (a) In making the attribution the liquidator’s objective shall in the first instance be so far as possible to reduce any deficit that may exist, at the liquidation date and before any attribution is made, either in the company’s long-term business or in its other business.
(b)If there is a deficit in both the company’s long-term business and its other business the attribution shall be in the ratio that the amount of the one deficit bears to the amount of the other until the deficits are eliminated.
(c)Thereafter the attribution shall be in the ratio which the aggregate amount of the liabilities attributable to the company’s long-term business bears to the aggregate amount of the liabilities not so attributable.
(5) For the purpose of paragraph (4) the value of a liability of the company shall, if it falls to be valued under Rule 6 or 7, have the same value as it has under that Rule but otherwise it shall have such valued as would have been included in relation to it in a balance sheet of the company prepared in accordance with the 1986 Order as at the liquidation date; and for the purpose of determining the ratio referred to in paragraph (4) but not for the purpose of determining the amount of any deficit therein referred to, the net balance of shareholders' funds shall be included in the liabilities not attributable to the company’s long-term business.
(6) Notwithstanding anything in paragraphs (1) to (5), the High Court may order that the determination of which (if any) of the assets referred to in paragraph (1) are attributable to the fund or funds maintained by the company in respect of its long-term business and which (if any) are not shall be made in such manner and by such methods as the Court may direct or the Court may itself make the determination.