3‑85 Meaning of qualified debt release a3‑85 Meaning of qualified debt release amount

3‑85 Meaning of qualified debt release amount

(1) The qualified debt release amount for a Fiscal Year, of a Constituent Entity that is a debtor, means an amount in respect of a debt release if: (a) the debt release is under a statutory insolvency or bankruptcy proceeding: (i) that is supervised by a court or other judicial body; or (ii) under which an independent insolvency administrator is appointed; or (b) the following conditions are met: (i) the debt release arises under an arrangement with one or more creditors that are not connected with the debtor (each of which is a third‑party creditor); (ii) it is reasonable to consider that, in the absence of the release of debts owed to one or more third‑party creditors under the arrangement, the debtor would be insolvent within 12 months of the date of the release; (iii) the debtor obtains an independent expert opinion attesting that the condition in subparagraph (ii) is met; or (c) if neither paragraph (a) nor (b) applies: (i) the debt release arises under an arrangement with one or more creditors that are not connected with the debtor (each of which is a third‑party creditor); and (ii) the amount is in respect of a debt owed to a third‑party creditor; and (iii) the debtor’s liabilities exceed the fair market value of its assets, determined immediately before the debt release; and (iv) the amount does not exceed the amount covered under subsection (2). (2) For the purposes of subparagraph (1)(c)(iv), this subsection covers the amount that is the lesser of the following amounts: (a) if, as a result of the debt release, the debtor’s assets are greater than or equal to its liabilities—the debtor’s liabilities less the fair market value of its assets, determined immediately before the debt release; (b) if any amount included, as a result of the debt release, in computing net income or loss is offset by a corresponding reduction in deferred tax assets—the reduction in the debtor’s deferred tax assets resulting from the debt release.