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MT Realisations Ltd (in liq) v Digital Equipment Co Ltd [2003] 2 BCLC 117

By Oxbridge Law TeamUpdated 04/01/2024 07:05

Judgement for the case MT Realisations Ltd (in liq) v Digital Equipment Co Ltd

Table Of Contents

  • Purchase acquired a target company from the vendor.

  • Vendor assigned purchaser the benefit of an on-demand loan due from the target company; purchaser agreed to pay vendor for the assignment of loan.

  • Purchaser was later unable to make payment to the vendor, so agreement was later restructured – target was made to make payments directly to the vendor, and this was set-off against the money still owed to the vendor by the purchaser under the loan assignment.

  • Was argued that set-off of money owed by purchase was unlawful financial assistance.

Held

  • Was no financial assistance

  • For there to be financial assistance, something has to be given to someone that he does not have already

    • Here, purchaser had not been given any new rights against target company, rather, it had already acquired the right to a loan payable by target company

      • Had purchaser wished to use this to pay off the vendor for the loan assignment, could have simply demanded payment in full at any time

    • By making loan payable to vendor and setting this money off against money due to vendor under loan assignment, was simply short-circuiting the process

  • Thus purchaser was simply exercising a pre-existing legal right - this cannot constitute financial assistance

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