Structuring Special Purpose Entities: Separateness, Bankruptcy Remoteness, and True Sales
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Bankruptcy
- event Date
Thursday, October 31, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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.
Mr. Selbst has more than 30 years of experience representing debtors, creditors, official committees, distressed investors and asset purchasers in bankruptcies and out-of-court restructurings. He is a frequent lecturer on bankruptcy and restructuring topics and has published articles and book chapters on bankruptcy-related topics. He has been frequently quoted in newspaper articles on insolvency related topics and has appeared on CNBC.
Mr. Smith focuses his practice on complex corporate restructuring and creditors' rights, including in court Chapter 11 cases and out-of-court workouts. He represents official and ad-hoc creditor committees, secured lenders, administrative agents, and other parties-in-interest in restructuring matters. He is experienced in analysis of true sale, non-consolidation and bankruptcy remoteness principles.
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.
- Bankruptcy remoteness: development of SPEs with internal protections against bankruptcy
- Structural features of SPEs
- Restrictions on activities
- Restrictions on the ability to voluntarily file bankruptcy
- Judicial treatment of bankruptcy waivers
- Substantive consolidation
- True sale vs. pledge
- Issues arising from SPE bankruptcy filing
- Authority to file
- Involuntary bankruptcies
- Dismissal for bad faith filing
- Fiduciary obligations
- Springing or "bad boy" guaranties
The panel will review these and other key issues:
- What factors are relevant in determining whether the transfer of assets to the SPE will be considered a true sale?
- How should the SPE be structured to maximize bankruptcy remoteness?
- What will courts consider in deciding whether substantive consolidation of the SPE and the transferor is warranted in a subsequent bankruptcy of the transferor?
Related Courses
Chapter 11 Fundamentals: Debtor-In-Possession Financing and Use of Cash Collateral
Tuesday, February 11, 2025
1:00 p.m. ET./10:00 a.m. PT