SWEDEN Law and Practice Contributed by: Albert Wållgren, Henrik Ossborn and Lionardo Ojeda, Advokatfirman Vinge KB
obligor under an LMA-form facilities agreement, including representations about:
funds, and are then swept, by daily transfers, to an assigned account of the issuer. Typically, the servicing agreement contains an indemnification provision whereby the servicer undertakes to indemnify the issuer against any cost, claim, loss and liability that has arisen in connection with a breach by the servicer of its liabilities and undertakings under the servicing agreement. As outlined in 6.3 Transfer of Financial Assets , it is an established principle under Swedish law that, in order to achieve a true sale where the transferor shall continue to service the sold assets, the transferee of the receivables (ie, the issuer) must be able to terminate the appoint - ment of the transferor (ie, the originator) as ser - vicer for the transferred loans, at any time and at its sole discretion. Thus, the servicing agreement usually contains such discretionary provisions alongside customary provisions regarding the resignation or termination of the servicer. In addition to the servicing agreement, the ser - vicer, the issuer and the security agent often enter into a back-up servicing agreement with a third-party service provider. This agreement, together with the servicing agreement, forms the basis for the replacement of the servicer in the case of a termination or resignation, pursuant to the servicing agreement. 3.2 Principal Warranties As outlined in 3.1 Bankruptcy-Remote Transfer of Financial Assets , asset-related warranties are the principal warranties used in securitisa - tion documentation governed by Swedish law, besides standard corporate warranties relating to the originator and the SPE. Such asset-related warranties are mainly focused on compliance
• status; • power; • capacity and authority; • licences; and • corporate approvals.
The asset warranties are more specific for a securitisation transaction, and include repre - sentations that: • the loans comply with the agreed eligibility criteria; • the loans are not subject to any security or encumbrance; • the loans have been originated and, up until the transfer, administered in compliance with the applicable laws – eg, the Swedish Consumer Credit Act ( Konsumentkreditlag (2010:1846)) in the case of consumer loans; • records have been kept about all transac - tions, receipts, proceedings and notices in relation to the loans; • adequate know-your-customer (KYC) checks have been conducted prior to origination of the loans; and • the borrower has made no claims, by way of set-off or counterclaim, for example, against the originator that would render the whole or part of the transferred loan unenforceable. Core Provisions of the Servicing Agreement Under the servicing agreement, the issuer appoints the originator as its servicer to admin - ister and to collect amounts due under the trans - ferred loans in accordance with the originator’s credit and collection policy. Loan proceeds are often collected on an account held by the ser - vicer, where such proceeds are held as escrow
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