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
Ø here, purchaser had not been given any new rights against target company
Ø 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
Ø 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
Ø this cannot constitute financial assistance
