Rendering Opinions in Structured Finance and Securitized Lending Transactions: Best Practices, Principles of Bankruptcy Remoteness, Legal Separateness and More

Navigating Assumptions, Qualifications, Limitations and Use of Letters; Reducing Risks for Opinion Givers

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Thursday, June 20, 2019

Recorded event now available

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Program Materials

This CLE webinar will provide a review of the use of opinion letters in structured finance transactions, explain various elements of the opinions and outline the types of assumptions and qualifications the opinion giver should utilize to minimize risks.

Description

The fundamental concept for structured finance is the isolation of assets in a "bankruptcy remote" special purpose entity (SPE) and the separateness of the SPE from its affiliates, which reduces the risk of bankruptcy and helps shield an SPE's assets against an affiliate's creditors. These transactions frequently use LLCs and statutory trusts formed in Delaware.

Two structuring techniques help achieve legal separation and bankruptcy remoteness in SPEs: the inclusion of bankruptcy remoteness and separateness provisions and strict limitations on the business purpose of an SPE in its organizational documents. Lenders, rating agencies, trustees, issuers and servicers generally require specialized opinions of counsel in structured finance transactions. Those opinions address the legal separateness of the SPE from affiliated entities, the legal isolation of the SPE's assets from the creditors of affiliated entities and the likelihood that such provisions will be respected by a bankruptcy court and enforced by state courts in the SPE's jurisdiction of formation.

A non-consolidation opinion addresses whether the SPE has been properly structured and meets established case law and other criteria for the enforcement of bankruptcy remoteness and separateness provisions. This opinion gives the recipient assurance that the risk of bankruptcy and substantive consolidation have been minimized to the greatest extent possible and the companion state law opinions evaluate the enforceability of those protections.

Listen as our authoritative panel of practitioners discusses drafting opinions of counsel in structured finance transactions with particular emphasis on rendering non-consolidation opinions, and best practices for the opinion giver to minimize risks.

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Outline

  1. Delaware corporate and SPE opinions
  2. Authority to file for bankruptcy
  3. Bankruptcy remoteness
  4. Drafting Considerations in Rendering Substantive Consolidation Opinions

Benefits

The panel will review these and other critical issues:

  • How should the opinion giver address the issue of bankruptcy remoteness: What are the limitations, assumptions, and qualifications that the opinion giver should consider? What should you be looking for in the SPE's organizational documents?
  • What issues should the opinion-giver address in a non-consolidation opinion?
  • What are the bankruptcy risks that parties providing financing to a structured finance SPE can minimize?
  • What should state law opinions address?

Faculty

McDougall, Lorne
Lorne W. McDougall

Partner
Locke Lord

Mr. McDougall has extensive experience in complex real estate related financings secured by a wide array of property...  |  Read More

Winter, Christopher
Christopher M. Winter

Partner
Duane Morris

Mr. Winter is co-chair of the Finance and Restructuring Transactions division of Duane Morris' Business...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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