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

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, November 2, 2022

Recorded event now available

or call 1-800-926-7926

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.



  1. Bankruptcy remoteness: development of SPEs with internal protections against bankruptcy
  2. Structural features of SPEs
    1. Restrictions on activities
    2. Restrictions on the ability to voluntarily file bankruptcy
    3. Judicial treatment of bankruptcy waivers
  3. Substantive consolidation
  4. True sale vs. pledge
  5. Issues arising from SPE bankruptcy filing
    1. Authority to file
    2. Involuntary bankruptcies
    3. Dismissal for bad faith filing
    4. Fiduciary obligations
    5. 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?


Selbst, Stephen
Stephen B. Selbst

Herrick, Feinstein

Mr. Selbst has more than 30 years of experience representing debtors, creditors, official committees, distressed...  |  Read More

Smith, Steven
Steven B. Smith

Herrick, Feinstein

Mr. Smith focuses his practice on complex corporate restructuring and creditors' rights, including in court Chapter...  |  Read More

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