The Study On Legal Issues In The Assign Of Basic Assets In Asset Securitization

Asset securitization emerged from the United States of America in the1970s, asa new kind of structured financial instruments. Owing to its superiority in creditinnovation, asset securitization has been spread worldwide and asset-backed securitiesalso play an important role in financial markets of developed country. Based on thestudies and practices of asset securitization in the U.S.A, through a detail study onlegal issues in the assign of basic assets in asset securitization in the essay, with theadoption of legal approach and positive approach, the author wants to study theestablishment and application of the relevant system in our country.The whole essay can be divided into five parts:The first chapter focuses on the legal definition of asset securitization. Withreference to the theorists and legislation in China, the author clarifies the twofundamental characteristics of asset securitization: Firstly, the risk-isolation betweenbasic assets and original holders; secondly, the cash flow generated by the basic assetssupports the repayment of the securities. The author also points out the impact of assetsecuritization on a country from the economic view. And then, through the form of achart, the author describes the transaction structure and the rights and obligationsbetween the participating subjects.The author explores the legal issues in the assign of basic assets in the secondchapter. Through the discussion of the legal characteristics of Trust, the authordeclares that a transfer of basic assets by way of Trust can meet the standards of a “true-sale” and perfection of transfer of receivables. Secondly, the author dividesassignment of credit into two parts: statutory prohibition against assignment andno-assignment clause, which revealing the conflict between autonomy of will of theparties and optimal allocation of social resources.The author analyzes the traditional standards of the risk-isolationmechanism-“true-sale” in the third chapter. The author, first, introduces thecontradiction in terms of risk burden of the basic asset assignment between practicesand legal regulation. And then, the author concerns the re-characterization of thetransfer, which refers to the nature of transfer as secured transactions or true sales.The different nature of transaction leads to the legal effects and makes big differencefor investors’ interest. Finally, the author introduces the judicial standard of“true-sale” practiced in the United States and points out its exposed defect.In the fourth chapter, the author discusses the impact of the U.S. Bankruptcy lawon asset securitization. First, the author introduces the applicable standards offraudulent transfers from the view of federal law and state law. Secondly, the authorfocuses on the substantive consolidation, which comes from the equitable relief. Andthen, the author analyzes the checklist in the United States which has significantinfluence on the construct of SPV.In light of the above research of the present situation on the theories, the authormakes an analysis of the present situation on the theories and practice of assetsecuritization in china in chapter five. The author introduces the binary parallelsituation in our current asset securitization practice and analyzes the legal structure ofthe transaction. The present risk-isolation mechanism in China depends on thestandard of account. The author also points out some problems in securitizationproject during the pilot phase from an empirical point of view. Finally, under the viewof bankruptcy law in china, the author studies the possibilities of the application offraudulent transfers and substantive consolidation.