Legal Analysis On Asset Assignment & True Sale Of Securitization

This paper discusses the transfer and sale of the basic assets in the process of assets securitization defined by the law.There are many legal issues in asset securitization due to its sophisticated structure compare with other financial tools. However, the most crucial one is the risk isolation of securitized assets to the (hereinafter referred to as "risk isolation of basic assets"). In fact, the key to the completion of securitization, as well as the highest goal, is to separate the assets from any financial risk of the initiator and ensure that the cash flow generated by the assets could pay the interests to investors according to the framework of securitization. Three legal issues closely related to risk isolation of basic assets require consideration. Firstly, how to define the basic assets and its transfer validity are the types of basic assets and the condition for transfer. Secondly, how to determine the"true sale"of basic assets is the condition of the "true sales". Thirdly, the point is how to achieve the separation of the basic assets from the initiator judicially after the sale of basic assets to SPV. In these three issues. The first issue focused primarily on the conditions for transfer of basic assets. My second question focuses on the"true sale"of basic assets. The third issue is how to achieve bankrupt isolation, the ultimate goal of transfer. The above three issues are inseparable during the asset securitization. Due to my limited capacity, I will focus on the first two issues.The structure of this article is as follows: Chapter 1:Introduction; Chapter 2: The basic legal framework for asset securitization; Chapter 3: The basic asset types in asset securitization and the definition of asset assignment; Chapter 4: The "true sales" of basic assets defined by the law; Chapter 5: Conclusion.Due to the diversification of asset securitization, this paper focus on asset securitization of debt-class asset in domestic securities practice.