SCHEDULES

SCHEDULE 9 Loan relationships: special computational provisions

F1Bad debt etc: parties having connection and creditor in insolvent liquidation etc

6A

(1)

This paragraph applies in any case falling within paragraph 6(1) above where—

(a)

the company which has the creditor relationship (“the creditor company”) F2is in insolvent liquidation;

F3(b)

F4that company has entered administration or that company is in insolvent administration;

(c)

an appointment of a provisional liquidator is in force in relation to that company under section 135 of that Act or Article 115 of that Order; or

(d)

under the law of a country or territory outside the United Kingdom, F5circumstances exist corresponding to any of those described in paragraphs (a) to (c) above.

(2)

Where this paragraph applies, a departure from the assumption that every amount payable under the relationship will be paid in full shall be allowed in relation to any amount accruing to the creditor company under the relationship—

(a)

in a case falling within paragraph (a) of sub-paragraph (1) above, at a time F6in the course of the winding up;

(b)

in a case falling within paragraph (b) of that sub-paragraph, at a time F7the company is in administration or F8in the course of the administration;

(c)

in a case falling within paragraph (c) of that sub-paragraph, at a time when the appointment of the provisional liquidator is in force; or

(d)

in a case falling within paragraph (d) of that sub-paragraph, at a time corresponding to that described in paragraph (a), (b) or (c) above (as the case may be).

F9(3)

For the purposes of this paragraph a company is in insolvent liquidation during the period which—

(a)

begins when it goes into liquidation, as defined in section 247(2) of the Insolvency Act 1986 or Article 6(2) of the Insolvency (Northern Ireland) Order 1989, at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up, and

(b)

ends when the winding up is completed or otherwise brought to an end (whether under paragraph 37 or 38 of Schedule B1 to the Insolvency Act 1986 or otherwise).

(4)

For the purposes of this paragraph a company in administration is in insolvent administration if—

(a)

in the case of an administration under Schedule B1 to the Insolvency Act 1986, it entered administration at a time when its assets were insufficient for the payment of its debts and other liabilities and the expenses of the administration, or

(b)

in a case where an administration order has effect under Part 3 of the Insolvency (Northern Ireland) Order 1989, the order was made at such a time.