TPG2022 Chapter IX paragraph 9.72

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The question may arise of whether the transferee should in fact be compensated by the transferor for taking over a loss-making activity. The response depends on whether an independent party in comparable circumstances would have been willing to pay for getting rid of the loss-making activity, or whether it would have considered other options such as closing down the activity; and on whether a third party would have been willing to acquire the loss-making activity (e.g. because of possible synergies with its own activities) and if so under what conditions, e.g. subject to compensation. There can be circumstances where an independent party would be willing to pay, e.g. if the financial costs and social risks of closing down the activity would be such that the transferor finds it more advantageous to pay a transferee who will attempt to reconvert the activity and will be responsible for any redundancy plan that may be needed.

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