Research On The Legal Issues Of Bankruptcy Isolation Mechanism For Specific Purpose Trusts

Since 2005,Asset securitization business has developed rapidly in China.To date,although securitization has formed two models based on trust or special plans,its essence is to build a bankruptcy isolation mechanism based on specific purpose trusts.However,whether or not a specific purpose trust architecture can achieve true bankruptcy isolation is worth considering.This article is based on this discussion.In addition to the introduction and conclusion,the main content of the full text is divided into four parts,as follows:Sec.1 mainly elaborates the basic theory of bankruptcy isolation mechanism for specific purpose trusts,and lays a theoretical foundation for the whole article.It is known from the article that the nature of a specific purpose trust is still a trust and has the commonness of the trust,but at the same time it is only because of its specific purpose of asset securitization.The core of asset securitization lies in bankruptcy isolation,ie,isolating the risk of bankruptcy of sponsoring institutions,trustees,and securities holders,and this requires the cooperation of real sales and the construction of specific purpose entities.Among them,the real sale achieves the first-level bankruptcy isolation,that is,the impact of the sponsoring institution's creditor on the securitized basic assets,while the specific-purpose entity achieves the second quarantine,that is,the bankruptcy effect of the sponsoring institution,the trustee,and the security holder.The main method here is to establish effective special-purpose trusts,and to achieve isolation by virtue of the trust's natural property-the independence of the trust property.Sec.2 mainly analyzes the system dilemma realized by the specific mechanism of bankruptcy isolation of a specific purpose trust.In theory,the realization of bankruptcy isolation requires the actual sale and the establishment of a specific purpose trust,but it can be implemented in practice.As far as real sales are concerned,real sales are not only challenged by the right of revocation but may also be difficult to achieve due to the application of the substantive merger rules.At the same time,due to the conflict between the unique attributes of the trust system and the legal dilemmas of real sales.In addition,our country's legislation does not specify the rules for the determination of real sales,and this defect also pushes the realization of real sales to the abyss.From the effective establishment of a specific purpose trust,due to the ambiguity in trust understanding in our country's trust law,the trust's effective rule is difficult to determine,and because of the imperfection of our publicity system,theeffectiveness of external publicity of trust property is weakened,resulting in an independent It is difficult for the trust property to resist the influence of the third party in good faith.Therefore,under the current institutional framework,whether the special purpose trust bankruptcy isolation mechanism can achieve institutional problems.Sec.3 mainly analyzes the extraterritorial practices of the real sales rules and the special purpose trust establishment system from the perspective of comparative law,with a view to providing reference for improving the bankruptcy isolation mechanism.In terms of real sales,there are usually two models of protection of interests of creditors and protection of interests of investors outside the region.The former tends to identify real sales with strict substantive standards,which is beneficial to protect creditors,but it brings uncertainty to investors.The increase in the cost of securitization;while the latter is more formal and cosmetic,it can give investors confidence.In fact,both are essentially value judgments based on different protection objects under the concept of transaction security.For our country,we can combine the two models to construct a positive standard and a negative standard for the determination of real sales in an eclectic way.In granting positive criteria for the presumption of power to protect investors,at the same time,we grant negative standard negative force to protect creditors,and this type of negative right is left to the discretion of the creditor.In the establishment of a specific purpose trust system,comparing the legislation in Japan and Taiwan,we found that the establishment of a trust system is essentially a value orientation issue,which is the result of measuring trade efficiency and transaction security.At the same time,it cannot be overlooked that no matter how we choose,we all have to admit the importance of maintaining transaction security.At least in the setting up of a specific purpose trust,we must consider the uniqueness of the trust publicity confrontation mechanism in fighting against bona fide third parties.Sec.4 mainly elaborates how to improve the bankruptcy isolation mechanism for specific purpose trusts.First of all,to improve the criteria for the determination of real sales in terms of positive standards and negative standards,among which positive standards include:qualified basic assets,eligible trading entities,the willingness of asset transfer,reasonable transaction prices,and disclosure procedures.Negative standards include: Retention of control rights,asset risks,and returns.Then,from the point of view of transaction security and the balance of transaction efficiency values,the establishment of a special purpose trust system will be improved.Among them,whether it is from transaction security considerations,or from the origin of trust,the requirements for asset securitization bankruptcy isolation,and the requirements for real sale,we should all recognize the nature of the trust.In the trust publicity system,the core of the publicity system is the maintenance of transactions.So it should expand the scope of the trust property registration,the general movable property such as creditor rights included in the scope of registration,in order to maintain the stability of the trust,while establishing a trust publicity and confrontation system.