Derivatives and capital markets products

Copyright © 2025 LexisNexis

This subtopic contains materials on the following in the context of restructuring:

  1. •

    securitisation and structured products

  2. •

    debt capital markets

  3. •

    derivatives

  4. •

    credit ratings

Securitisation

Securitisation makes use of a receivables income stream through the creation of a special purpose vehicle (SPV) which issues bonds or notes to obtain cheaper finance.

Benefits of securitisation include:

  1. •

    cheaper borrowing

  2. •

    balance-sheet improvements

  3. •

    capital adequacy requirements

  4. •

    diversification

Structure

Key features are:

  1. •

    the originator (debtor company) assigns the receivables to a newly-created SPV

  2. •

    the SPV only has a contractual relationship with the originator

  3. •

    the SPV issues various tranches of bonds/notes to various capital markets investors (bondholders/noteholders). The rating of the bonds/notes may be increased by obtaining credit enhancement (eg letters of credit, credit default swaps or monoline insurance, though this is less common post-credit crunch)

  4. •

    the money raised by the bond/note issuance is used by the SPV to purchase the receivables from the originator

  5. •

    the SPV is designed to be insolvency remote (see Practice Note: The insolvency remote SPV in structured finance)

  6. •

    derivatives may be used to manage risk (see Practice Note: Derivatives

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Existing user? Sign-in TAKE A FREE TRIAL
Powered by Lexis+®
Latest Restructuring & Insolvency News

Insolvency Service reports 11-year director ban for BBL fraud

The Insolvency Service has reported the disqualification of building contractor Tahir Haq from serving as a company director for 11 years, accompanied by mandated compensation payments totalling £58,963 (including interest and costs). Haq obtained a £50,000 bounce back loan (BBL) for Integral Maintenance Team Ltd by overstating his company's turnover by £200,000, despite the company being entitled to only around £3,000. The disqualification, effective from 1 July 2025, prohibits Haq from promoting, forming, or managing any company without prior court approval.

Disputed debt and conversion of members’ voluntary liquidation to creditors’ voluntary liquidation (Noal SCSp and others v Novalpina Capital LLP (in members voluntary liquidation) and others)

Restructuring & Insolvency analysis: This judgment confirms that, if a company in members’ voluntary liquidation (MVL) is unable to pay its debts in full together with interest at the official rate within the period stated in the directors’ declaration made under section 89 of the Insolvency Act 1986 (IA 1986), then the company must be placed into creditors’ voluntary liquidation (CVL). There is no solvency test to justify varying this period. The company is already in liquidation and the liquidator has no discretion with regard to having to act under IA 1986, s 95 to convert the MVL to a CVL. Written by Andrew Mace, barrister at Tanfield Chambers.

Issue 168 of Insolvency Service’s Dear IP published

The Insolvency Service reports that the Information Sharing (Disclosure by the Registrar) Regulations 2024 (SI 2024/1378), effective from 20 December 2024, will enable the Registrar of Companies to disclose non-public information to insolvency practitioners (IPs) and The Financial Conduct Authority has published updated guidance (FG25/2) for IPs handling regulated firms, incorporating Consumer Duty requirements. Following the Pindar Scarborough Ltd (in Administration) [2024] EWHC 908 and Boughey & Anor v Toogood International Transport and Agricultural Service Ltd (in administration) [2024] EWHC 1425 court judgments, the Insolvency Service has revised its interpretation of 'creditor' status in terms of the Insolvency Act 1986 (IA 1986), adopting a context-specific approach rather than maintaining its previous fixed-point definition.

The Supreme Court tweaks Etridge (Waller Edwards v One Savings Bank plc)

Property Disputes analysis: English property law periodically produces epoch-making decisions of the highest court. In years to come, Waller Edwards v One Savings Bank plc may well become such a decision. It enjoys the respectable jurisprudential lineage of three famous House of Lords’ decisions: Barclays Bank v O’Brien, CIBC Mortgages v Pitt, and Royal Bank of Scotland v Etridge, but it also applies established principles in a novel way. Written by Marc Beaumont, Windsor Chambers.

View Restructuring & Insolvency by content type :  
News
Practice notes
Precedents
Q&As

Popular documents

Schemes of arrangement—convening hearing and sanction hearing

Schemes of arrangement—convening hearing and sanction hearingConvening hearingPursuant to section 896 of the Companies Act 2006 (CA 2006), the court may order a meeting of the creditors or class of creditors, or of the members or class of members, to be summoned in such manner as the court directs.

Priority between loss reliefs in loss making companies

Priority between loss reliefs in loss making companiesWhy does it matter?A company that is a member of a group and has incurred any of the types of losses available for surrender by way of group relief may, without any further rules, have more than one way in which to use the loss. There are a

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?A limited company having a share capital may not alter that share capital, except in the ways listed in section 617 of the Companies Act 2006 (CA 2006). Shares in a company cannot simply be cancelled without following an
Schemes of arrangement—convening hearing and sanction hearing

Schemes of arrangement—convening hearing and sanction hearing

Schemes of arrangement—convening hearing and sanction hearingConvening hearingPursuant to section 896 of the Companies Act 2006 (CA 2006), the court may order a meeting of the creditors or class of creditors, or of the members or class of members, to be summoned in such manner as the court directs.

Priority between loss reliefs in loss making companies

Priority between loss reliefs in loss making companies

Priority between loss reliefs in loss making companiesWhy does it matter?A company that is a member of a group and has incurred any of the types of losses available for surrender by way of group relief may, without any further rules, have more than one way in which to use the loss. There are a

Late payment penalties—inheritance tax

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?A limited company having a share capital may not alter that share capital, except in the ways listed in section 617 of the Companies Act 2006 (CA 2006). Shares in a company cannot simply be cancelled without following an