SINGAPORE Law and Practice Contributed by: Lee Xin Mei, Cheryl Tan, Eugene Lee and Benjamin Liew, Rajah & Tann Singapore LLP
• servicing the receivables owed to the origina - tor by the underlying contract counterparties in accordance with the relevant collection policies; • ensuring that the collected receivables are paid into the issuer’s account(s); • administering the enforcement of the obliga - tions of contract counterparties in the under - lying contracts; and • maintenance of servicing records. A fee is usually paid to the servicers for the ser - vices rendered (subject to any relevant priorities of payment). Any failure of the servicer to comply with its obligations under the servicing agree - ment may result in a back-up servicer being appointed to replace it, early amortisation, or an event of default under the notes. 3.6 Principal Defaults Typical events of default will include: • non-payment by the SPE of payments as they fall due under the transaction documents; • material breaches by the SPE of its obliga - tions under the transaction documents; and • insolvency of or insolvency proceedings in respect of the SPE. When an event of default is triggered under the notes, the noteholders are entitled to declare all amounts outstanding under the notes to be immediately due and payable, trigger any enforcement of security given by the SPE (if applicable) and enforce their rights under the transaction documents in respect of the notes. 3.7 Principal Indemnities Indemnities are extensively negotiated in Singa - pore but generally fall within the following two categories:
• indemnities from the originator in relation to the sold assets – this would cover (i) breaches of representations or warranties made by the originator under the transaction docu - ments and (ii) instances where the originator includes ineligible receivables within the sold pool of assets; and • indemnities from the servicer in relation to the transaction documents – this would cover (i) breaches of representations or warranties made by the servicer under the transaction documents and (ii) failure by the servicer to comply with its servicing obligations under the transaction documents. 3.8 Bonds/Notes/Securities The terms and conditions of the notes would be contained within the notes trust deed. The terms and conditions of the notes would typically address the following: • form, denomination and title; • status and ranking; • security; • issuer covenants; • interest; • redemption; • payments; • taxation; • events of default/early amortisation events; • limited recourse and non-petition; • application of monies/priorities of payment; and • enforcement. 3.9 Derivatives The derivative instruments that are used would differ depending on the structure of securitisa - tion transaction, but their function is primarily to hedge against currency and/or interest rate mismatches between the assets and the notes.
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