Debt Assignment

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Debt Assignment

The transfer of debt, and the right of receiving repayment, from a creditor to a third party, usually, but not always, a subsidiary of the original creditor. A company may assign debt to a subsidiary to protect investors who do not wish to invest in a new, risky deal, or it may simply wish to hide losses from shareholders. The debtor is unaffected unless the third party draws up new terms. See also: Enron scandal, Aggressive accounting.
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In exchange for the vendor debt, the Canadian corporation has agreed to issue its one-year zero coupon notes to the vendors in the face amount of the vendor debt and convey the vendor debt assignments to a wholly-owned Canadian subsidiary.