The insolvency remote SPV in structured finance
The insolvency remote SPV in structured finance

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • The insolvency remote SPV in structured finance
  • Introduction to SPVs
  • Aspects of insolvency remoteness
  • Limited permitted activities and outsourcing of functions
  • Accounting treatment of SPVs
  • Use of offshore SPVs
  • Securitisation Regulation requirements for SSPEs

BREXIT: The UK is leaving the EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For guidance, see Practice Note: Brexit—impact on finance transactions—Brexit planning and impact—financial services, Brexit—impact on finance transactions—Key issues for securitisation transactions and Brexit—impact on finance transactions—Derivatives and debt capital markets transactions—key SIs.

Introduction to SPVs

What is an SPV?

'SPV' stands for 'special purpose vehicle'. An SPV is a body corporate, usually with limited liability, which is specially-incorporated for the purpose of a structured finance transaction in a jurisdiction and with an ownership structure which for tax, regulatory and/or accounting reasons result in favourable treatment for the transaction for which it has been set up. SPE (special purpose entity) and SPC (special purpose company) refer to essentially the same concept. (SPV, SPE and SPC can also to refer to the terms 'single purpose vehicle', 'single purpose entity' and 'single purpose company' respectively.)

SPVs are most often used as financing vehicles (typically, issuers of securities) in securitisation and structured finance transactions and therefore 'issuer' and 'SPV' become somewhat interchangeable terms as a matter of market practice. For a general introduction to securitisation transactions, see Practice Note: What is securitisation?

What is insolvency remoteness?

Insolvency remoteness refers to the result of the structural and