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Limited recourse: Difference between revisions
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Usually the limitation of a claim in this way goes hand-in-hand with a security interest over the defined pool of assets. | Usually the limitation of a claim in this way goes hand-in-hand with a security interest over the defined pool of assets. | ||
Security and limited recourse are fundamental structural aspects of contracts with [[Special purpose vehicle|special purpose vehicles]] and [[investment fund]]s, so if you feel the urge to challenge these provisions, do yourself and everyone else on the deal a favour: save your breath. | Security and limited recourse are fundamental structural aspects of contracts with [[Special purpose vehicle|special purpose vehicles]] and [[investment fund]]s, so if you feel the urge to challenge these provisions, do yourself and everyone else on the deal a favour: save your breath. In the immortal words of the East Enders: “Leave it Phil! Leave it! He's not worth it.” | ||
In the immortal words of the East Enders: “Leave it Phil! Leave it! He's not worth it.” | |||
===Formulations=== | ===Formulations=== | ||
The following, in the linguistic mush you can expect from [[Mediocre lawyer|securities lawyers]], are the sorts of things you can expect the [[limited recourse]] provision to say: | The following, rendered in the linguistic mush you can expect from [[Mediocre lawyer|securities lawyers]], are the sorts of things you can expect the [[limited recourse]] provision to say without material complaint: | ||
*'''Recourse limited to segregated assets''': your [[Limited recourse|recourse]] against the [[SPV]] will be strictly limited to those assets that are ring-fenced for the particular deal you are trading against. This ring-fencing might take the form of: | *'''Recourse limited to segregated assets''': your [[Limited recourse|recourse]] against the [[SPV]] will be strictly limited to those assets that are ring-fenced for the particular deal you are trading against. This ring-fencing might take the form of: | ||
**'''[[Security]] and limited recourse''': {{tag|security}} and {{tag|contract}} (in an old-style [[repackaging]] with a regular [[LLC]]) — there there is a subtle trade off between [[security]] over your assets (preferring your claim against all other comers) and limitation of that claim to those [[secured asset|secured assets]]; or | **'''[[Security]] and limited recourse''': {{tag|security}} and {{tag|contract}} (in an old-style [[repackaging]] with a regular [[LLC]]) — there there is a subtle trade off between [[security]] over your assets (preferring your claim against all other comers) and limitation of that claim to those [[secured asset|secured assets]]; or | ||