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Limited recourse: Difference between revisions
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But haven’t they been, like, reckless trading? No. Remember, we are in the [[parallel universe]] of [[SPV]]s. Unlike normal commercial undertakings, [[SPV]]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 [[SPV]]s on that understanding. | But haven’t they been, like, reckless trading? No. Remember, we are in the [[parallel universe]] of [[SPV]]s. Unlike normal commercial undertakings, [[SPV]]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 [[SPV]]s on that understanding. | ||
The directors are really nominal figures: they outsource executive and trading decisions to an [[investment manager]]. Their main job is to ensure accounts are prepared and a return filed each year. They are not responsible for the trading strategy that drobve 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.< | The directors are really nominal figures: they outsource executive and trading decisions to an [[investment manager]]. Their main job is to ensure accounts are prepared and a return filed each year. They are not responsible for the trading strategy that drobve 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: | ||
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*'''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 | ||
**'''Corporate structure''': by means of a specialist corporate structure providing for segregation of the [[corporate personality]] into little cells which may<ref>such a company and [[incorporated cell company]]</ref> or may not<ref>Such a company a [[segregated portfolio company</ref> have their own [[legal personality]] (if the [[SPV]] is a [[segregated portfolio company]] or an [[incorporated cell company]]); | **'''Corporate structure''': by means of a specialist corporate structure providing for segregation of the [[corporate personality]] into little cells which may<ref>such a company and [[incorporated cell company]].</ref> or may not<ref>Such a company a [[segregated portfolio company]].</ref> have their own [[legal personality]] (if the [[SPV]] is a [[segregated portfolio company]] or an [[incorporated cell company]]); | ||
*'''No set-off or netting between cells''': [[Netting]] and [[set-off]] will be limited to the specific [[cell]] you are facing: this means if your deal goes down, others issued from the same [[SPV]] can continue unaffected — boo — ''and vice versa'' — hooray. | *'''No set-off or netting between cells''': [[Netting]] and [[set-off]] will be limited to the specific [[cell]] you are facing: this means if your deal goes down, others issued from the same [[SPV]] can continue unaffected — boo — ''and vice versa'' — hooray. | ||
*'''Extinction (or non-existence) of outstanding debt''': Following total exhaustion of all assets after enforcement, appropriation, liquidation and distribution, and realisation of all claims subsequently arising form those assets, your outstanding unpaid debt will be “extinguished”. | *'''Extinction (or non-existence) of outstanding debt''': Following total exhaustion of all assets after enforcement, appropriation, liquidation and distribution, and realisation of all claims subsequently arising form those assets, your outstanding unpaid debt will be “extinguished”. | ||