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Limited recourse: Difference between revisions
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Now, why would any [[creditor]] want to put an empty [[espievie]] — one which has already handed over all its worldly goods — into liquidation? What good would it do? Search me. Why, on the other hand, would the directors of that empty [[espievie]], bereft as it is of worldly goods, be anxious for it ''not'' to go into liquidation? ''Because their personal livelihoods depend on it'': being directors of a [[bankrupt]] company opens them to allegations of reckless trading, which may bar them from acting as directors to ''other'' countries. Since that’s their day job, that’d be a bummer. | Now, why would any [[creditor]] want to put an empty [[espievie]] — one which has already handed over all its worldly goods — into liquidation? What good would it do? Search me. Why, on the other hand, would the directors of that empty [[espievie]], bereft as it is of worldly goods, be anxious for it ''not'' to go into liquidation? ''Because their personal livelihoods depend on it'': being directors of a [[bankrupt]] company opens them to allegations of reckless trading, which may bar them from acting as directors to ''other'' countries. Since that’s their day job, that’d be a bummer. | ||
But if the [[espievie]]’s [[bankrupt]], doesn’t that mean they ''have'' been reckless? ''No''. Remember, we are in the [[parallel universe]] of [[SPV]]s. Unlike normal commercial undertakings, [[espievie]]s run on autopilot. They are designed to give exposure, exactly, to the pools of assets and liabilities they hold. That’s the deal. Everyone trades with that understanding. The directors are really nominal figures: they outsource trading decisions (if any — in a [[repackaging]], there most likely won’t be any) to an [[investment manager]]. The directors are really there to ensure accounts are prepared and a return filed each year. They are not responsible for the trading strategy that drove the [[espievie]] into the wall.<ref>The [[investment manager]] is. So should ''she'' be barred from managing assets? THIS IS NOT THE TIME OR THE PLACE TO DISCUSS.</ref> | But if the [[espievie]]’s [[bankrupt]], doesn’t that mean they ''have'' been reckless? ''No''. Remember, we are in the [[parallel universe]] of [[SPV]]s. Unlike normal commercial undertakings, [[espievie]]s run on autopilot. They are designed to give exposure, exactly, to the pools of assets and liabilities they hold. That’s the deal. Everyone trades with that understanding. ''Those'' assets might blow up, but that’s hardly the [[espievie]]’s fault. How is it supposed to know? It is a harmless little [[Open-ended investment company|otter-like creature from Guernsey]]. The directors are really nominal figures, and are also rather like otters: they outsource trading decisions (if any — in a [[repackaging]], there most likely won’t be any) to an [[investment manager]]. The directors are really there to ensure accounts are prepared and a return filed each year, and build little dams out of twigs and rushes.<ref>''That is a beaver, not an otter''. Ed.</ref> They are not responsible for the trading strategy that drove the [[espievie]] into the wall.<ref>The [[investment manager]] is. So should ''she'' be barred from managing assets? THIS IS NOT THE TIME OR THE PLACE TO DISCUSS.</ref> | ||
So all an [[investment fund]]’s [[limited recourse]] clause really needs to say is: | So all an [[investment fund]]’s [[limited recourse]] clause really needs to say is: | ||