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Limited recourse: Difference between revisions
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===In a nutshell=== | ===In a nutshell=== | ||
[[Security]] and [[limited recourse]] are fundamental structural aspects of contracts with [[Special purpose vehicle]]s and [[investment fund]]s. They | [[Security]] and [[limited recourse]] are fundamental structural aspects of contracts with [[Special purpose vehicle]]s and [[investment fund]]s. | ||
'''[[Security interest|Secured]], [[limited recourse]] to [[repackaging|multi-issuancevehicles]]''': In the world of multi-issuance repackaging [[SPV]]s, secured limited recourse obligations are ''de rigueur''. They save the cost of creating thousands of new vehicles, and really only do by [[contract]] what establishing a brand new [[espievie]] for each deal would do through the exigencies of coporastion law and the [[corporate veil]]. There is a ''quid pro quo'': noteholders agree to limit their claims to the liquidated value of the assets underlying that specific deal, but in return, the issuer creates a fist-ranking security over those assets, stopping any interloper happening by and getting its mitts on them. Over the years the technology has been refined, standardised, and it plays little part in the life of a modern-day structured finance counsel, though, at his mother’s knee, he might once have been told fairy stories about what became of poor Fidgety Phillip when he carelessly put “extinction” rather than “no debt due” in on his way home from school and burned to death.<ref>Come to think of it he may have forgotten to file a [[Slavenburg]].</ref> | |||
'''Limiting recourse to the funds entire pool of assets''': A provision which says "once all the fund’s assets are gone, you can’t put it into bankruptcy, is essentially harmless, seeing as once all the fund’s assets are gone there’s no ''point'' putting it into bankruptcy. So, if you are feeling especially ornery, and have the urge to challenge these provisions, do yourself and everyone else on the deal a favour: don’t. | |||
'''Limiting recourse to assets managed by an agent''': On the other hand, imiting recourse to a pool of assets managed by a single agent or investment manager — being a ''subset'' of toe total number of assets owned by the fund — is a different story altogether. This, by sleept market convention, has become a fairly standard feature of the market, but to the [[JC]] and his friends and relations, seems ''batshit insane''. | |||
===Limited recourse and [[investment fund]]s=== | ===Limited recourse and [[investment fund]]s=== | ||