Where there is a sale and leaseback or a lease and leaseback
and the seller (or grantor of the head lease) has leased the plant
or machinery to another person under a long funding lease the
leaseback is also a long funding lease for both parties to the
leaseback.
If the plant or machinery is leased back indirectly all of
the leases involved in the leaseback are long funding leases.
The rules about the meaning of the transfer of an asset that
apply to transfers and assignments apply to sale and leasebacks and
lease and leasebacks with one addition: the transfer of an asset
also includes the grant of a lease.
Example
B Ltd owns a ship that he leases to C Ltd under a long
funding lease. B Ltd then enters into a sale and leaseback of the
ship with A Ltd. The leaseback from A Ltd to B Ltd is necessarily a
long funding lease by virtue of CAA01/S70Y, even if it would
otherwise not be a long funding lease.
If A Ltd leases the ship to X Ltd who then leases it back to
B Ltd the lease from A Ltd to X Ltd and the lease from X Ltd to B
Ltd are both long funding leases.
