Anglo Petroleum v TFB (Mortgages) Ltd

Target company owed money to parent company. Target entered into agreement with parent whereby it agreed repayment schedule for some of the debt and granted security over its assets; in return, parent wrote off rest of the debt. On same day, purchaser bought target company. Was later argued that security agreement was financial assistance to purchaser. Held:

 

·       As matter of commercial reality, security agreement was price target company had to pay for obtaining a reduction in its debt

·       Thus was not financial assistance.