Article 19 - Adjustments in Respect of Debt Releases

At the election of the Filing Constituent Entity, the amount of income from a release of a debt included in the Financial Accounting Net Income or Loss of a Constituent Entity located in the Kingdom shall be excluded from the computation of the Constituent Entity Income or Loss where any of the following apply:

1. The debt release is undertaken under statutorily provided insolvency or bankruptcy proceedings, that are supervised by a court or other juridical body in the Kingdom or where an independent insolvency administrator is appointed.

2. The debt release arises pursuant to an arrangement where one or more creditors is a person not connected with the debtor and it is reasonable to assume that the debtor would be insolvent within 12 months but for the release of the third-party debts released under the arrangement.

3. Subject to Paragraph B of this Article, and where Clauses 1 and 2 of this Paragraph do not apply, the debt release occurs when the debtor's liabilities are in excess of the fair market value of its assets determined immediately before the debt release.

Where a Filing Constituent Entity makes an election on the basis of Clause 3 of Paragraph A of this Article, only an amount with respect to debts owed to a creditor that is a person that is not connected with the debtor will be excluded from the Constituent Entity Income or Loss and only to the extent of the lesser of any of the following:

1. The excess of the debtor's liabilities over the fair market value of its assets determined immediately before the debt release.

2. The reduction in the debtor's tax attributes under the tax laws of the debtor's jurisdiction resulting from the debt release.

An election under Paragraph A of this Article is an Annual Election which can be made in accordance with Article 20 of the Law.