PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
nary assignment of receivables under the Por - tuguese Civil Code (enacted by Decree-Law No 47/344, dated 25 November 1966, as amended from time to time) and a secured loan, which can be exposed to general claw-back rights during the applicable hardening periods, contained in the Portuguese Insolvency Code (enacted by Decree-Law No 53/2004, dated 18 March 2004, as amended from time to time), as far as the transaction or the relevant security is concerned. Upon an assignment of receivables made pur - suant to the Securitisation Law, the relevant assigned receivables portfolio – which is no longer an asset of the originator – will not form part of the originator’s insolvency estate, and the assignment is not generally subject to claw-back rights and hardening period provisions. Further - more, any amounts held by the originator for any reason will not be part of its insolvency estate, but will rather belong to the assignee. The same applies to the entity performing the role of ser - vicer of the assigned receivables (which may or may not be the originator, depending on the circumstances and regulatory approvals). The Securitisation Law clearly provides that, in an insolvency event, the amounts held by the ser - vicer that pertain to the assigned receivables (ie, amounts relating to payments made under the assigned receivables) do not form part of the servicer’s insolvency estate. The assignee fully bears the credit risk of the underlying borrow - ers of the assigned receivables, so there is no recourse to the originator. The assignment of receivables for securitisation purposes may only be invalidated in the case of fraud against creditors. This is subject to very demanding requirements, including fraudulent intent and bad faith on the part of both parties (assignor and assignee), which are extremely dif - ficult to meet in the context of a market trans -
action that is carried out and executed with the approval of the regulatory authorities, and under their supervision. Similarly, and in the absence of bad-faith activity by both parties, the transaction is also not subject to termination or revocation in the insolvency of the originator (ie, there are no claw-back rights and no hardening periods in cases of insolvency). The Securitisation Law also provides specific protections with regard to the insolvency of the assignee (which is a regulated SPE – see 6.2 SPEs ), which would otherwise work to the det - riment of the investors who have acquired the relevant ABS. Even though the SPE itself can be subject to insolvency (but bearing in mind that its limited corporate purpose and regulated nature make this highly unlikely to occur), in respect of rights and obligations within its general estate, such an insolvency would not affect the relevant securitisation(s) undertaken by the SPE, given that each securitisation corresponds to a seg - regated and autonomous pool of assets, com - prised of the assigned receivables, and that each such pool of assets is only available to meet the liabilities arising from that securitisa - tion transaction. In fact, the pool of assets backing the relevant ABS issuance, including the relevant receivables portfolio, forms an autonomous pool of assets (segregated from other autonomous pools of assets pertaining to other securitisation transac - tions) that is only available to meet the liabilities due from the SPE (either a securitisation fund (FTC) or a securitisation company (STC), as defined in 6.2 SPEs ) to its security holders and other creditors (service providers, swap counter - parties, etc) in respect of that transaction only.
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