On The Legal Mechanism In The Operation Of SPV

Special purpose vehicle (hereafter SPV) is the intermediate instrument which receives basic assets from initiators and on such a basis distributing securities to realize bankruptcy remote during the securitization. When constituting bankruptcy remote, we should first cautiously choose the assets to be secutirized, and decide whether it will bring stable cash flow; secondly, initiators should assign the basic assets to SPV through true sale to avoid those assets being incorporated into the balance sheet of initiators; and finally, SPV should maintain independent during the transaction. The establishment of bankruptcy remote does not necessarily mean the result of remote bankruptcy risk. Generally, to realize bankruptcy remote, challenges of redefinition and independency of SPV. Redefinition means court will redefine the assigned assets to confirm whether there are truly sold or simply secured financing. If it is confirmed ass secured financing, when the initiators is bankrupt, the assets for securitization will be incorporated into the assets of the bankrupt; the independency of the SPV means SPV should be independent or it shall face the risk of being unveiled. For the above discussion, this thesis will focus on the following problems: the choosing and selling of basic assets, which is the prerequisite and basis for the operation of SPV; the constitution of bankruptcy remote during operation, which is the core issue of the operation of SPV; how to withstand the challenge of Piercing the Corporation's Veil and substantive consolidation, which are necessities for the smooth operation of SPV. Details are the following: First chapter: the choosing and selling of basic assets. This chapter mainly discusses the requirements for assets which are securitizable, and sort these assets to different classifications. And then discusses the requirements for making a true sale and how to protect investors when the assignment is redefined as secured financing. Second chapter: the constitution of bankruptcy remote in the operation of SPV. This chapter mainly focuses on the two requirements for establishing bankruptcy remote, namely, on the one hand, SPV should be separated from the bankruptcy risk of initiators, on the other hand, SPV should be separated from its own risks. The first part including problems that require attention while initiators assigning assets to SPV; the second half including two problems concerning how to avoid being filed bankruptcy or file bankruptcy itself. Third chapter: bankruptcy remote faces the challenge of piercing the veil of the corporation. This chapter analyzes the conditions and restrictive factors for applying piercing the veil of the corporation and poses some advices for the construction of legal rules of such system in china on referring corresponding rules of foreign countries and the actual conditions of our country. Fourth chapter: the issue concerning substantive consolidation. This chapter analyzes two viewpoints over substantive consolidation, discusses requirements for applying this principle and explains the relationship between substantive consolidation and piercing the veil of the corporation.