NETHERLANDS Law and Practice Contributed by: Mandeep Lotay and Dámaris Engelschman, Freshfields LLP
• a receivables purchase agreement (RPA) between, among others, the originator/seller, the SPV and the security agent; • a (notarial) deed of assignment between the originator/seller and the SPV; and • a servicing agreement between, among oth - ers, the issuer SPV, the originator/seller in its capacity as servicer, and the security agent. The RPA The RPA typically includes the following contrac - tual provisions to ensure the bankruptcy-remote transfer of the receivables to the SPV. • The receivables sold and assigned to the issuer SPV, which is usually demarcated by referring to a definition of receivables as defined in a master definitions agreement to which all involved in the transaction are a party (with each individual receivable identi - fied and listed in an annex to the RPA), as well as the related security attached to each receivable that is, by operation of law, trans - ferred to the issuer together with the sale and assignment of the receivables. It is important that the receivables that are the subject of the sale and assignment be clearly identified together with the prescribed purchase price, including any deferred components. • The arm’s length consideration paid by the SPV to the originator/seller for the receiva - bles. • The title for the sale and assignment of the receivables. • Provisions on the undisclosed assignment of the receivables, including information about the nature of the deed of assignment that will be used. • Provisions for properly carrying out the trans - fer of the receivables. As already mentioned, the SPV can only enforce its claims against underlying obligors if and to the extent that
the obligors have been notified of the assign - ment. However, for various reasons, parties generally do not wish to notify the obligors of the assignment. Instead, the transaction par - ties often ensure that the obligors make pay - ments under the receivables to an account of a foundation established specifically for collecting payments under the receivables. Furthermore, the RPA usually refers to a series of “assignment notification events”, a term typically included in the master defini - tion agreement, which is a set of events and circumstances (often relating to the originator and its business) that trigger the notification of the assignment to the obligors. Examples of such assignment notification events are insolvency of the seller and/or originator, a servicing termination event, or insolvency of the collection foundation (see below). After an assignment notification event has occurred and the obligors have been notified by the security trustee (as directed by the notehold - ers), the underlying obligors can only make payment under the receivables to an account designated by the issuer SPV. • The originator usually gives representations and warranties to the SPV relating to, among other things: (a) its power to dispose of the receivables to the SPV; (b) the existence, transferability, nature, ori - gins, quality and integrity of the receiva - bles; and (c) the absence of any obligor set-off rights or other obligor defences. The Collection Foundation Account Pledge Agreement Although not a necessary feature required to effect a true sale, in order to mitigate co-min - gling risk and ensure bankruptcy remoteness of collections until the occurrence of assignment
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