Structuring Special Purpose Entities: Separateness, Bankruptcy Remoteness, and True Sales

This CLE course will prepare bankruptcy and finance counsel to structure special purpose entities (SPEs) to achieve bankruptcy remoteness and avoid substantive consolidation, as well as to keep assets that are the subject of a loan or other financing isolated. The panel will discuss lessons from recent bankruptcy cases involving SPEs, including the debate on the validity of bankruptcy blocking restrictions.

SPEs are intended to protect an entity's assets against credit risks of other entities, including the former owner of the assets. Three structuring techniques ensure legal separation: true sales, SPEs (including separateness covenants), and bankruptcy-remote vehicles.

The bankruptcy-remote SPE must be structured such that it is unlikely to file, or have filed against it, a bankruptcy petition, as well as prevent substantive consolidation with the transferor in the event of the transferor's bankruptcy.

SPE bankruptcy-remote strategies continue to be tested in bankruptcy cases. Counsel must understand and apply lessons from recent case law to draft structured-financing documentation that minimizes bankruptcy risks.

Listen as our authoritative panel of attorneys discusses best practices for structuring SPEs to achieve bankruptcy remoteness and avoid substantive consolidation. The panel will review recent bankruptcy rulings impacting bankruptcy proofing strategies.