Company A (Parent)
Company B (100% Subsidiary of A)
Company C (100% Subsidiary of B)
Company B stopped trading several years ago and has no cash available - but it owes Company C £10,000
Company A (parent) has offered to take over the debt that is owed by B to C. Essentially, Company A will make annual payments of £1,000 to Company C to clear down the debt.
Is there a technical term for this type of arrangement? I would like to record it properly in the books as well as have a formal document laying out the terms of this arrangement. Any advice, so that when it comes to audit, we can show them on paper what we are doing?