SWEDEN Law and Practice Contributed by: Albert Wållgren, Henrik Ossborn and Lionardo Ojeda, Advokatfirman Vinge KB
graphs, it is crucial that the substantial risks associated with the underlying assets are being transferred to the transferee (ie, the SPE) in order to achieve a true sale that would survive the scrutiny of a court. This means that any credit risk associated with the underlying assets must be assumed by the SPE, and that the SPE or any of its creditors would not have a recourse claim against the transferor (ie, the originator) if an underlying debtor fails to meet its payment obligations. It should be noted that the legal treatment of a transfer of assets (whether it is characterised as a true sale or not, as further outlined in 8.1 Legal Issues With Securitisation Account- ing Rules ) is independent from the accounting analysis and treatment of such transaction – ie, the above-mentioned principles established by the Supreme Court do not necessarily have an impact on the accounting true sale analysis. As outlined in 6.4 Construction of Bankruptcy- Remote Transactions , the legal counsel of the securitisation investors will usually issue one legal opinion addressing the true sale, among other things. 6.4 Construction of Bankruptcy-Remote Transactions As outlined in 6.2 SPEs , it is a well-established principle under Swedish law that a Swedish lim - ited liability company is a separate legal entity from its owners, and that assets of a subsidiary (the SPE) would be part of its parent company’s (the originator’s) insolvency estate – assuming that any transfer of assets between the origina - tor and the SPE has been duly perfected and falls within the applicable boundaries for any claw-back risks, as outlined in 6.1 Insolvency Laws .
In addition, as most securitisation transactions in the Swedish market are structured in such a way that the originator will continue to service the transferred underlying assets (in most cases receivables) and collect interest and principal receipt on such assets, it is crucial that such receipts be held as escrow funds by the servicer on behalf of the issuer in order to avoid being assets of the servicer/originator in the bank - ruptcy of the servicer/originator. Therefore, the servicing agreement, as further outlined in 3.5 Principal Servicing Provisions , usually contains provisions addressing this issue. Other means for achieving a bankruptcy-remote structure include: • incorporating restrictive language in the by- laws of the SPE regarding its business objec - tive; and • ensuring that the SPE is not part of a group for VAT purposes (see 6.2 SPEs ). It is not market standard in Sweden to obtain separate insolvency opinions in connection with a securitisation transaction. Instead, insolvency matters will be addressed in the general legal opinion, which will normally cover: • capacity and authority; • validity and enforceability;
• authorisations and registrations; • choice of law and jurisdiction; • true sale; • bankruptcy-remoteness; and • tax. 6.5 Bankruptcy-Remote SPE
In addition to that previously discussed in 6. Structurally Embedded Laws of General Appli- cation , the securitisation documentation would typically include limited recourse provisions
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