NETHERLANDS Law and Practice Contributed by: Mandeep Lotay and Dámaris Engelschman, Freshfields LLP
notification events, the underlying obligors must make payment under the receivables to an account of a foundation established specifically for collecting payments under the receivables (the “collection foundation”). The foundation is a bankruptcy-remote orphan entity. To further mitigate any bankruptcy risk, the account(s) of the collection foundation is/are usually pledged to the issuer SPV. To that extent, it is also impor - tant to note within the context of Dutch securiti - sations that Dutch banks usually obtain a first right of pledge on the accounts of accounthold - ers pursuant to the General Banking Conditions ( Algemene Bankvoorwaarden ). However, for the purpose of providing investors with assur - ance over the bankruptcy-remote status of the acquired cash flows, Dutch banks are generally willing to release their first ranking right of pledge on the accounts of collection foundations. 3.2 Principal Warranties The originator, the issuer SPV and possibly other transaction parties will provide fundamental war - ranties, for example about their capacity, author - ity, compliance with law and regulations and sol - vency, as well as asset warranties. Please see 3.1 Bankruptcy-Remote Transfer of Financial Assets for information on asset warranties. Breaches of asset warranties are usually covered by obligations of the originator/seller to repur - chase the relevant sold receivables. 3.3 Principal Perfection Provisions See 3.1 Bankruptcy-Remote Transfer of Finan- cial Assets . 3.4 Principal Covenants See 3.1 Bankruptcy-Remote Transfer of Finan- cial Assets for principal covenants of the origi - nator with respect to itself (existence, solvency,
compliance with law, etc) and receivables (trans - ferability, nature, security, etc). The issuer generally provides a series of nega - tive and possible undertakings to ensure that it maintains its bankruptcy remoteness and does not incur liabilities other than those under the securitisation. Such undertakings include not exercising any other business or attracting any other indebtedness. The documents further generally include an undertaking relating to the applicable risk- retention regime where the relevant risk retain - ers undertake to comply with risk-retention rules throughout the life of the transaction. If the secu - ritisation qualifies as a securitisation under the EU Securitisation Regulation it will, for example, have to comply with EU risk-retention rules as contained in Article 6 of the EU Securitisation Regulation, meaning that the entity qualifying as originator, sponsor or original lender for the purpose of the EU Securitisation Regulation will need to retain at least a 5% material net eco - nomic interest in the transaction throughout the transaction’s life. The documents generally include undertakings for the chosen risk retainer to ensure compliance with such rules. 3.5 Principal Servicing Provisions The Servicing Agreement governs matters in relation to servicing the receivables, such as the servicing standard, collection of the receivables, and the process with respect to any receivables in arrears, including carrying out any enforce - ment procedures. Furthermore, the Servicing Agreement typi - cally includes reporting provisions setting out the nature of the information that the Servicer should provide to the transaction parties and the
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