Asset Securitization Special Purpose Vehicle Legal Issues

Asset Backed Securitization (ABS) is the most important innovation in finance field in the latest 30 years. Since it appeared in American capital market in 1970's, ABS develops prosperously in American capital market and in other important countries' capital market relying on its advantages in asset credit finance, structure finance and finance beyond the form.ABS refers to finance system that issues stocks on credit basis of independent specific asset and uses cash produces by specific asset as cash source to pay for stocks. Special purpose vehicle (SPV) is the most innovative part in the structure of ABS and is the key of operation of ABS. ABS should be practiced in our country, of which the key process is to establish SPV in line with the realities of our country that is indispensable of law system. Therefore, this article makes a systematic study on legal problems concerned in SPV and puts forward suggested laws and realistic choice of establishing SPV in our country. This article consists of five parts.Part One aims at basic theories of ABS, introduces ABS's definition and characteristics, participants and processes and the realistic meaning of ABS in our country. This lays a foundation for the following parts of the article to discuss the whole course of SPV and isolation of risk which is the key mechanism of ABS. On one hand all securitization asset of SPV must be isolated from organizer's risk, on the other hand SPV itself must be isolated from bankrupt risk. Thus the function of firewall of SPV in risk isolation of ABS is emphasized.Part Two makes an analysis of SPV's legal functions and attributes and its legal relations in the operation of ABS, then reveals the definition of SPV.Part Three introduces, compares and analyzes the SPV modes in different countries, in order to provide reference for establishing SPV in our country.Part Four makes an analysis of SPV's isolation mechanism. Bankrupt risk...