SPAIN Law and Practice Contributed by: Jaime de la Torre and Jaime Juan Rodríguez, Cuatrecasas
the Spanish insolvency law is not applicable to SPEs. 6.3 Transfer of Financial Assets Legal Requirements The sale of assets to the SPE must comply with the requirements set forth in Article 17 of the Spanish Securitisation Law, which include the following: • written agreement – the seller and the SPE should execute a written document identify - ing each loan by at least the following data fields: identification code, execution date, outstanding balance as of cut-off date, inter - est, amortisation system and maturity date; and • disclosure – the seller must file the financial statements for the last two fiscal years with the CNMV, and state any executed securitisa - tion transactions in its financial statement. True-Sale Opinion Usually, the drafting counsel includes a declara - tion in its transaction legal opinion concluding that the assignment of the receivables to the SPE on the incorporation date: • has been carried out legally, validly and unconditionally for the remaining term until maturity by means of a true sale or assign - ment or transfer; and • is enforceable vis-à-vis the seller and any third parties with full recourse to borrowers (and, where applicable, guarantors). 6.4 Construction of Bankruptcy-Remote Transactions As described in 6.5 Bankruptcy-Remote SPE , Spanish SPEs are bankruptcy-remote by legal design. However, there is one specific risk relat -
ed to the collections, which must be mitigated from a structural point of view. Commingling risk arises in Spanish securitisa - tions when the servicer (usually the seller/origi - nator) collects the loans in its own bank account and transfers the amount to the SPE’s bank account within a period of time. In the event of the servicer’s insolvency, there is a risk that the claim of the SPE to the moneys deposited in the servicer’s bank account may be challenged by other creditors due to the fungible nature of money. Best practice in Spain to mitigate the commin - gling risk includes the following: • operational term – reducing the time of trans - fer from the seller’s collection account to the SPE in order to quantitatively reduce the risk amount; • the seller setting up a commingling reserve in an SPE’s locked account amounting for an average of commingling risk; and • creating a pledge on the seller’s collection account in order to have a preferential claim over that account in the event of the seller’s insolvency. 6.5 Bankruptcy-Remote SPE The bankruptcy-remoteness of SPE funds is a feature by legal design. As described in 2.1 Issuers , the SPE used in Spanish transactions is necessarily a securitisation fund regulated under the Spanish Securitisation Law. The Spanish Insolvency Law is not applicable to securitisa - tion funds due to their lack of legal personality. Notwithstanding the above, the following best practices must be observed in connection with the bankruptcy-remote nature of Spanish SPEs.
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