Structured

Finance &
Securitisation
Contributing editor
Patrick D Dolan

2017 © Law Business Research 2017

 Structured Finance
& Securitisation 2017
Contributing editor
Patrick D Dolan
Norton Rose Fulbright US LLP

Publisher The information provided in this publication is

Law
Gideon Roberton general and may not apply in a specific situation.
[email protected] Business Legal advice should always be sought before taking
Research any legal action based on the information provided.
Subscriptions This information is not intended to create, nor does
Sophie Pallier Published by receipt of it constitute, a lawyer–client relationship.
[email protected] Law Business Research Ltd The publishers and authors accept no responsibility
87 Lancaster Road for any acts or omissions contained herein. The
Senior business development managers London, W11 1QQ, UK information provided was verified between
Alan Lee Tel: +44 20 3708 4199 February and March 2017. Be advised that this is a
[email protected] Fax: +44 20 7229 6910 developing area.

Adam Sargent © Law Business Research Ltd 2017

[email protected] No photocopying without a CLA licence. Printed and distributed by
First published 2015 Encompass Print Solutions
Dan White Third edition Tel: 0844 2480 112
[email protected] ISSN 2058-5594

© Law Business Research 2017

CONTENTS

Global overview 5 Portugal37

Patrick D Dolan Paula Gomes Freire and Mariana Padinha Ribeiro
Norton Rose Fulbright US LLP VdA Vieira de Almeida

Canada6 Switzerland44
William (Bill) K Jenkins, Peter E Murphy and Dennis R Wiebe Lukas Wyss, Johannes Bürgi and Maurus Winzap
Dentons Canada LLP Walder Wyss Ltd

Cayman Islands 11 Turkey49

James Burch and Shamar Ennis Hakan Yazıcı and Pınar Başdan
Walkers YazıcıLegal

Denmark15 United Kingdom 54

Michael Steen Jensen and Mikkel Fritsch Guy O’Keefe and Tolek Petch
Gorrissen Federspiel Slaughter and May

France21 United States 61

Olivier Hubert Patrick D Dolan
De Pardieu Brocas Maffei Norton Rose Fulbright US LLP

Devin Swaney and Andrew Bloom

India26
Dechert LLP
Justin Bharucha
Bharucha & Partners

Japan31
Motohiro Yanagawa, Takashi Tsukioka and Yushi Hegawa
Nagashima Ohno & Tsunematsu

2 Getting the Deal Through – Structured Finance & Securitisation 2017

© Law Business Research 2017

 PREFACE

Preface
Structured Finance & Securitisation 2017
Third edition

Getting the Deal Through is delighted to publish the third edition

of Structured Finance & Securitisation, which is available in print, as an
e-book and online at www.gettingthedealthrough.com.

Getting the Deal Through provides international expert analysis in

key areas of law, practice and regulation for corporate counsel, cross-
border legal practitioners, and company directors and officers.

Throughout this edition, and following the unique Getting the Deal
Through format, the same key questions are answered by leading
practitioners in each of the jurisdictions featured.

Getting the Deal Through titles are published annually in print.

Please ensure you are referring to the latest edition or to the online
version at www.gettingthedealthrough.com.

Every effort has been made to cover all matters of concern to

readers. However, specific legal advice should always be sought from
experienced local advisers.

Getting the Deal Through gratefully acknowledges the efforts of all

the contributors to this volume, who were chosen for their recognised
expertise. We also extend special thanks to the contributing editor,
Patrick D Dolan of Norton Rose Fulbright US LLP, for his continued
assistance with this volume.

London
March 2017

www.gettingthedealthrough.com  3
© Law Business Research 2017
INDIA Bharucha & Partners

India
Justin Bharucha
Bharucha & Partners

General A securitisation company, as defined under the SARFAESI Act,

means any company formed and registered under the Companies Act,
1 What legislation governs securitisation in your jurisdiction?
1956 and Companies Act, 2013 for the purpose of securitisation. Such a
Has your jurisdiction enacted a specific securitisation law?
company may only undertake the business of securitisation.
Securitisation transactions are permitted under the general principles The Guidelines on Securitisation of Standard Assets define secu-
of contract law in India, such as credit factoring. However, in such ritisation as a process by which a single performing asset or a pool of
cases where assignment of obligations is involved the principles of con- performing assets are sold to a bankruptcy-remote special purpose
tract law require that the consent of all parties involved be obtained. vehicle (SPV) and transferred from the balance sheet of the originator
As a result, assignment of receivables must be effected by: to the SPV in return for an immediate cash payment.
• the execution of a written agreement of assignment; and
• notice to the borrower of such assignment. 3 How large is the market for securitisations in your
jurisdiction?
The Securitisation and Reconstruction of Financial Assets and
The issuance volume of rated transactions in the Indian securitisation
Enforcement of Security Interest Act, 2002 (SARFAESI Act) is the
market was approximately 250 billion rupees for financial year 2015/16.
principal legislation governing securitisation in India, and the pro-
visions of this act have overriding effect over other legislation. The
Regulation
SARFAESI Act is supplemented by various guidelines and direc-
tions issued by the Reserve Bank of India (RBI), which include the 4 Which body has responsibility for the regulation of
Securitisation Companies and Reconstruction Companies (Reserve securitisation?
Bank) Guidelines and Directions, 2003 as amended (Securitisation Although securitisation is primarily governed by the RBI, various
Companies and Reconstruction Companies Guidelines 2003); the other regulatory authorities such as the Registrar of Companies, the
Revisions to the Guidelines on Securitisation Transactions for Banks Securities and Exchange Board of India (SEBI) and the Debts Recovery
dated 7 May 2012 as amended (Bank Securitisation Guidelines 2012); Tribunal regulate and govern securitisation.
the RBI Master Circular on Customer Service in Banks dated 1 July 2015
(RBI Master Circular on Customer Service in Banks); the Insolvency 5 Must originators, servicers or issuers be licensed?
and Bankruptcy Code 2016 (Bankruptcy Code); the Guidelines of
In the context of securitisation, the SARFAESI Act defines an ‘origina-
Securitisation Transactions for Non-Banking Financial Companies
tor’ as the owner of a financial asset which is acquired by a securitisa-
(NBFCs) dated 21 August 2012 as amended (NBFCs Securitisation
tion company for the purpose of securitisation. The provisions of the
Guidelines 2012); and the Securities Exchange Board of India (Public
SARFAESI Act stipulate that a securitisation company may acquire the
Offer and Listing of Securitised Debt Instruments) Regulations, 2008
financial assets of a bank or a financial institution. Therefore, for the
dated 26 May 2008 (SEBI Debt Listing Regulations).
purposes of the SARFAESI Act, an originator must be a bank or finan-
In addition, the RBI Guidelines on Securitisation of Standard
cial institution.
Assets dated 1 February 2006 (Guidelines on Securitisation of Standard
The issuer is the securitisation company formed for the purpose of
Assets) regulate securitisation of standard assets by banks, financial
securitisation. The SARFAESI Act stipulates that it is mandatory for all
institutions and non-banking financial companies. Standard assets
securitisation companies (ie, the issuers) to obtain a certificate of regis-
are defined as any assets that are not non-performing assets. Non-
tration from the RBI. The securitisation company must have an owned
performing assets have been defined under the SARFAESI Act as an
fund of at least 20 million rupees or such other higher amount as the
asset or account of a borrower that has been classified by a bank or
RBI may prescribe.
financial institution as a substandard, doubtful or loss asset:
Per the SEBI Debt Listing Regulations, a ‘servicer’ is any person
• in the case that such bank or financial institution is administered
appointed by the SPV and who is responsible for the management or
or regulated by an authority or body established, constituted or
collection of the asset pool or making allocations or distributions to
appointed by any law for the time being in force, in accordance
holders of the securitised debt instrument but does not include a trus-
with the directions or guidelines relating to assets classifications
tee for the issuer if the trustee receives such allocations or distribu-
issued by such authority or body; and
tions. An originator may also be appointed as a servicer by the SPV. The
• in any other case, in accordance with the directions or guidelines
SARFAESI Act and the SEBI Debt Listing Regulations do not expressly
relating to asset classifications issued by the RBI.
provide for any licences that a servicer must obtain.
2 Does your jurisdiction define which types of transactions
6 What will the regulator consider before granting, refusing or
constitute securitisations?
withdrawing authorisation?
The SARFAESI Act sets out a broad, open-ended definition for what
For the purpose of granting or refusing to grant a certificate of registra-
constitutes ‘securitisation’. Essentially, securitisation is any transaction
tion to the issuer under the SARFAESI Act, the RBI will broadly con-
that deals with the acquisition of financial assets by any securitisation
sider the following criteria:
company from any originator. This can involve the securitisation com-
• the securitisation company must not have incurred losses in any of
pany raising funds from investors by issue of security receipts repre-
the three preceding financial years;
senting undivided interest in such financial assets, or otherwise.

26 Getting the Deal Through – Structured Finance & Securitisation 2017

© Law Business Research 2017

Bharucha & Partners INDIA

• the securitisation company must have made adequate arrange- 11 What types of receivables or other assets can be securitised?
ments for realisation of the financial assets acquired for the pur- Any financial assets may be securitised under the provisions of the
pose of securitisation, and must be able to pay periodical returns SARFAESI Act. This includes:
and redeem on respective due dates on the investments made in • a claim to any debt or receivables or part thereof, whether secured
the company by the qualified institutional buyers or other persons; or unsecured;
• the directors of the securitisation company must have ade- • any debt or receivables secured by, mortgage of, or charge on,
quate professional experience in matters related to finance immoveable property;
and securitisation; • a mortgage, charge, hypothecation or pledge of moveable property;
• any of its directors must not have been convicted of any offence • any right or interest in the security, whether full or part underlying
involving moral turpitude; such debt or receivables;
• a sponsor must be a fit and proper person in accordance with the • any beneficial interest in property, whether moveable or immove-
criteria as may be specified in the guidelines issued by the RBI for able, or in such debt or receivables, whether such interest is exist-
such persons; ing, future, accruing, conditional or contingent;
• the securitisation company must have complied with or be in a • any beneficial right, title or interest in any tangible property given
position to comply with prudential norms specified by the RBI; and on hire or financial lease or conditional sale or under any other
• the securitisation company must have complied with the relevant contract which secures the obligation to pay any unpaid portion of
conditions issued by the RBI. the purchase price of such asset or an obligation incurred or credit
otherwise provided to acquire such tangible property;
The RBI may cancel a certificate of registration granted to a securitisa- • any right, title or interest on any intangible asset or license or
tion company if such company: assignment of such intangible asset, which secures the obligation
• ceases to carry on the business of securitisation; to pay any unpaid portion of the purchase price of such intangible
• ceases to receive or hold any investment from a qualified institu- asset or an obligation incurred or credit otherwise extended to ena-
tional buyer; ble the borrower to acquire such intangible asset or obtain license
• fails to comply with any condition stipulated in the certificate of of the intangible asset; and
registration; or • any financial assistance such as loans or any advance granted.
• at any time fails to fulfil any of the conditions that the RBI has taken
into account for the grant of registration; The Bank Securitisation Guidelines, 2012 further state that credit facili-
or fails to: ties (such as cash credit accounts, credit card receivables, etc), assets
• comply with any direction issued by the RBI; purchased from other entities, securitisation exposures (eg, mort-
• maintain accounts in accordance with the requirements of any law gage-backed and asset-backed securities) and loans with bullet repay-
or any direction or order issued by the RBI; ment of both the principal and interest (save for such loans or trade
• submit or offer for inspection its books of account or other relevant receivables as specifically allowed by the RBI to be securitised) cannot
documents when so demanded by the RBI; or be securitised.
• obtain prior approval of the RBI for any substantial change in its
management or change in location of its registered office or change 12 Are there any limitations on the classes of investors that can
in its name. participate in an offering in a securitisation transaction?
The SARFAESI Act stipulates that securitisation companies can offer
7 What sanctions can the regulator impose?
security receipts only to qualified institutional buyers for subscription.
If any person contravenes or attempts to contravene or abets the con- A ‘qualified institutional buyer’ under the SARFAESI Act includes
travention of the provisions of the SARFAESI Act or any corresponding a financial institution, insurance company, bank, trustee or securitisa-
rules, then such person will be punished with imprisonment for a term tion company which has been granted a certificate of registration under
which may extend up to one year, or with a fine or both. Separately, SARFAESI Act, any asset management company making investments
regarding the quantum of fine that may be imposed, the SARFAESI on behalf of a mutual fund or a foreign institutional investor registered
Act prescribes a fine of up to 10 million rupees or twice the amount under the Securities and Exchange Board of India Act, 1992, any cat-
involved in such contravention, whichever is more. Further, in case of egory of non-institutional investors as may be specified by the RBI or
continuing contraventions, an additional penalty which may extend up any other corporate body as specified by the SEBI.
to 100,000 rupees per day for each day during which the contravention Such an issuance to qualified institutional buyers would need to
continues may also be imposed. comply with the provisions of the Companies Act, 2013, the Securities
Contracts (Regulation) Act, 1956 and the Securities and Exchange
8 What are the public disclosure requirements for issuance of a Board of India Act, 1992.
securitisation?
The SARFAESI Act does not provide for any public disclosures to be 13 Who may act as custodian, account bank and portfolio
made for issuance of a securitisation. However, if a debt security administrator or servicer for the securitised assets and the
instrument has to be listed, provisions under regulation 22 and 26 of securities?
the SEBI Debt Listing Regulations must be adhered to. There is no specific restriction under the SARFAESI Act with respect to
entities that may act as custodian, account bank and portfolio admin-
9 What are the ongoing public disclosure requirements istrator or servicer for securitised assets and securities. The provisions
following a securitisation issuance? of the Securities and Exchange Board of India (Custodian of Securities)
The SARFAESI Act does not provide for any ongoing public disclosures Regulations, 1996; Securities and Exchange Board of India (Merchant
to be made for issuance of a securitisation. Bankers) Regulations, 1992; and Securities and Exchange Board of
India (Bankers to an Issue) Regulations, 1994 stipulate conditions
Eligibility applicable to custodian, account bank and portfolio or servicer for
securitised assets and securities.
10 Outside licensing considerations, are there any restrictions on
which entities can be originators?
14 Are there any special considerations for securitisations
Under the SARFAESI Act, an originator is defined as the owner of involving receivables with a public-sector element?
a financial asset which is acquired for the purpose of securitisation.
The provisions of the SARFAESI Act apply to all banks and prescribed
However, for the purposes of the SARFAESI Act, an originator must nec-
financial institutions. Financial institutions have been defined to
essarily be a bank or a prescribed financial institution. See question 5.
include, inter alia, all public financial institutions as well. Institutions
For the purposes of the Guidelines on Securitisation of Standard
that qualify as public sector institutions are identified by the central
Assets, an originator must necessarily be a bank.
government from time to time.

www.gettingthedealthrough.com 27
© Law Business Research 2017
INDIA Bharucha & Partners

Transactional issues dated 28 May 2007, regulate the rating of security receipts and stipu-
late that:
15 Which forms can special purpose vehicles take in a
• securitisation companies must obtain a rating for security receipts
securitisation transaction?
from a rating agency registered with the SEBI;
The SARFAESI Act stipulates that an SPV for a securitisation transac- • a rating for the security receipts must be obtained not less than
tion must be set up in the form of a trust. The securitisation company once in the 12 months immediately following the deemed date
will act as the trustee to the SPV, and it will be the trust which holds it of allotment of the security receipts issued pursuant to the offer
for the benefit of the investors from whom the funds are being raised. document, and thereafter the rating must be reviewed at half-
yearly intervals;
16 What is involved in forming the different types of SPVs in • the rating must be based on ‘recovery risk’ and reflect the present
your jurisdiction? value of the anticipated recoverability of future cash flows. The
Under the Indian Trusts Act, 1882, a ‘trust’ is defined as an obligation rating must be assigned using the Recovery Rating Scale, which
annexed to the ownership of property, arising out of the confidence has an associated range of recovery expressed in terms of percen-
reposed in and accepted by the owner; or declared and accepted by the tile; and
owner for the benefit of another, or of another and the owner. • the recovery rating must be decided after considering the extent of
A trust in relation to immoveable property must be declared by a debt aggregation, collateral available, security and seniority of the
written trust deed by the author of the trust or trustees or by the will of debts, expected cash flows, uncertainty in realising expected cash
the author of the trust or of a trustee. Such trust deed is only valid if it is flows, etc.
registered under the Registration Act, 1908. A trust in relation to move-
able property is only valid if declared by a registered non-testamentary These guidelines also set out the procedure for carrying out these rat-
instrument, or if the ownership of the properly is transferred to the ings, and the procedure for computing the net asset value of the secu-
trustee. The formation and registration of a trust takes approximately rity receipts.
15 days.
23 What are the chief duties of directors and officers of SPVs?
17 Is it possible to stipulate which jurisdiction’s law applies to the Must they be independent of the originator and owner of
assignment of receivables to the SPV? the SPV?
The law applicable to the assignment of receivables to the SPV must Under the SARFAESI Act, the SPV should be managed by a securitisa-
be Indian law. tion company. As mentioned above, the SPV must be set up in the form
of a trust, which is governed by the provisions of the Indian Trusts Act,
18 May an SPV acquire new assets or transfer its assets after 1882. The assets acquired or funds raised for acquiring the assets will be
issuance of its securities? Under what conditions? held by the securitisation company in a trust for the benefit of the quali-
fied institutional buyers, also holding the security receipts from which
Yes, the SPV may acquire new assets or transfer its assets after issuance
the funds with respect to the SPV were raised.
of the security receipts. The SPV may use funds raised from the inves-
tors to acquire new assets. Such assets will have to be held in trust for
24 Are there regulations requiring originators and arrangers to
the benefit of the investors.
retain some exposure to risk in a securitisation?
19 What are the registration requirements for a securitisation? Under the SARFAESI Act, banks and non-banking financial institu-
tions must retain a part of the loan in order to ensure that they carry out
The SARFAESI Act stipulates that every securitisation transaction is
proper due diligence of loans to be securitised. The minimum retention
required to be filed with the Central Registry within a period of 30 days
requirement ranges from 5 per cent to 10 per cent of the book value of
after the date of such transaction. This registration must be made in
the loans to be securitised, depending on the tenure of the loan.
the form prescribed together with the payment of such fees, as may
In addition, securitisation companies must have a 5 per cent stake
be prescribed.
in the SPV.
20 Must obligors be informed of the securitisation? How is
Security
notification effected?
The SARFAESI Act provides that the originator may, at its option, give 25 What types of collateral/security are typically granted to
notice to the obligor of acquisition of the financial assets by a securiti- investors in a securitisation in your jurisdiction?
sation company. If such a notification is given to the obligor, a notice Under the SARFAESI Act, investors are granted a security receipt as
also has to be given to the registry where the security interest created security, which evidences the acquisition of an undivided right, title or
with respect to that financial asset has been registered. interest in the financial assets involved in securitisation. This is in the
nature of a debt instrument.
21 What confidentiality and data protection measures are
required to protect obligors in a securitisation? Is waiver of 26 How is the interest of investors in a securitisation in the
confidentiality possible? underlying security perfected in your jurisdiction?
Banks are under an obligation not to disclose any customer informa- The SARFAESI Act stipulates that in the event that a borrower fails to
tion. The obligor’s secrecy and privacy must be protected even if there discharge its liability, the trustee of the trust (ie, the SPV) may recover
is no express confidentiality clause in the loan agreement. However, the interest in the underlying assets to the extent that it is a secured
this is subject to the exceptions stipulated in paragraph 25 of the RBI interest, by:
Master Circular on Customer Service in Banks. These exceptions are • taking possession of the secured assets of the borrower, including
as follows: his or her right to transfer by way of lease, assignment or sale for
• where disclosure is under compulsion of law; realising the secured asset;
• where there is duty to the public to disclose; • taking over the management of the business of the borrower;
• where interest of bank requires disclosure; and • appointing any person to manage the secured assets, the posses-
• where the disclosure is made with the express or implied consent sion of which has been taken over by the secured creditor; and
of the customer. • issuing a written notice to any person, who has acquired secured
assets from the borrower and from whom money is due or may be
22 Are there any rules regulating the relationship between credit due to the borrower, to pay the SPV so much as is sufficient to pay
rating agencies and issuers? What factors do ratings agencies the secured debt.
focus on when rating securitised issuances?
The RBI Guidelines on Declaration of Net Asset Value of Security In addition to the enforcement of security interest as above, every
Receipts issued by Securitisation Company/Reconstruction Company, securitisation company is also required to formulate a plan for realisa-
tion of assets, which may include:

28 Getting the Deal Through – Structured Finance & Securitisation 2017

© Law Business Research 2017

Bharucha & Partners INDIA

• rescheduling of payment of debts payable by the borrower; 30 What are the primary tax considerations for issuers in your
• settlement of dues payable by the borrower; jurisdiction? What structures are used to avoid entity-level
• change in or takeover of the management, or sale or lease of the taxation of issuers?
whole or part of the business of the borrower; and The income from the activity of securitisation of such trusts regulated
• conversion of any portion of debt into shares of the bor- by the RBI is exempt from taxation in terms of section 10(23DA) of the
rower company. Income Tax Act.

27 How do investors enforce their security interest? 31 What are the primary tax considerations for investors?
The SARFAESI Act stipulates that all qualified institutional investors, Taxation of securitisation entities set up as a trust for the activity of
holding security receipts of at least 75 per cent of the total value of the securitisation up to 31 May 2016 is as follows:
security receipts issued by the trust, will be entitled to call a meeting • the securitisation trust must pay additional income tax at a rate
of all the qualified institutional buyers. Every resolution passed in such of 25 per cent on the distribution made to investors who are indi-
meeting will be binding on the company. A qualified institutional buyer viduals or members of a Hindu undivided family, and at a rate of
will only be entitled to invoke such right at the end of five years or eight 30 per cent in all other cases. In addition to the above, a surcharge
years; in other words, at the end of the period of realisation applicable of 10 per cent and education tax of 3 per cent will be levied;
for the particular asset. • no such additional income tax is payable if the income distrib-
uted by the securitisation trust is received by a person who is tax
28 Is commingling risk relating to collections an issue in your exempt; and
jurisdiction? • consequent to the levy of distribution tax, all the distributed
The SPV raising funds from qualified institutional buyers must formu- income received by the investor from the securitisation trust will
late separate schemes for every financial asset acquired out of such be exempt from tax in terms of section 10(35A) of the Income
investments. The following conditions must be kept in mind while for- Tax Act.
mulating such schemes:
• the securitisation company must maintain separate and distinct Bankruptcy
accounts with respect to each scheme; and
32 How are SPVs made bankruptcy-remote?
• the securitisation company must ensure that the realisation of
such financial assets is held and applied towards the redemption of To ensure that SPVs are bankruptcy-remote, securitisation companies
investments and payment of returns assured on such investments are required to raise funds by formulating separate schemes, maintain
under the relevant scheme. scheme-wise separate and distinct accounts and use the realisations
in each scheme for the redemption and securing of that particular
Separately, under the provisions of the SARFAESI Act, a securitisa- scheme. Further, Indian courts have held that at the time of the wind-
tion company may enforce secured assets without the intervention ing-up, trust money held by companies does not form part of the com-
of courts, but a similar benefit does not extend to unsecured assets. pany’s assets in the hands of a liquidator and is payable as a priority to
However, enforcement of a security interest in the underlying assets the claims of the creditors.
which are secured in nature is not affected by the commingling of
assets that are unsecured in nature. 33 What factors would a court in your jurisdiction consider in
making a determination of true sale of the underlying assets
Taxation to the SPV (eg, absence of recourse for credit losses, arm’s
length)?
29 What are the primary tax considerations for originators in
The Bank Securitisation Guidelines, 2012 and the Guidelines on
your jurisdiction?
Securitisation of Standard Assets set out certain conditions that must
Under section 2(14) of the Income Tax Act, 1961 (Income Tax Act), the be met in order to constitute a ‘true sale’ of assets. These conditions are
term ‘capital asset’ is defined as property of any kind held by a per- illustrative and not exhaustive:
son who is being assessed, whether or not it is connected with his or • the sale must result in the immediate legal separation of the origi-
her business or profession. This does not include any stock-in-trade, nator from the assets which are sold to the new owner, namely, the
consumable stores or raw materials held for the purposes of his or her SPV. The assets must be put beyond the originator’s and their cred-
business or profession. itors’ reach, even in the event of the bankruptcy of the originator;
Accordingly, any sale of assets by the originator will be taxable as • the originator must effectively transfer all risks, rewards, rights and
a ‘business profit’ or ‘capital gain’. This categorisation will depend on obligations pertaining to the asset and must hold any beneficial
facts, such as whether the assets sold by the originator are held as stock interest in the asset after its sale to the SPV;
in trade or capital assets. • the originator must not have any economic interest in the assets
after its sale, and the SPV will have no recourse to the originator

Justin Bharucha [email protected]

Hague Building Tel: +91 22 6132 3900

9, SS Ram Gulam Marg Fax: +91 22 6633 3900
Ballard Estate www.bharucha.in
Mumbai 400 001
India

www.gettingthedealthrough.com 29
© Law Business Research 2017
INDIA Bharucha & Partners

for any expenses or losses except those specifically permitted in 34 What are the factors that a bankruptcy court would consider
the Bank Securitisation Guidelines, 2012 and the Guidelines on in deciding to consolidate the assets and liabilities of the
Securitisation of Standard Assets; originator and the SPV in your jurisdiction?
• there will be no obligation on the originator to repurchase or fund It is unlikely that the bankruptcy court would consolidate the assets and
the repayment of the asset or any part of it, or to substitute assets liabilities of the originator and the SPV if the securitisation transaction
held by the SPV, or to provide additional assets to the SPV at any has taken place in accordance with the provisions of the SARFAESI Act.
time except those arising out of breach of warranties or representa-
tions made at the time of sale. The originator must be able to dem-
onstrate that a notice to this effect has been given to the SPV, and
that the SPV has acknowledged the absence of such obligation;
• the originator must be able to demonstrate that it has taken all
reasonable precautions to ensure that it is not obliged, nor will feel
impelled, to support any losses suffered by the scheme or investors;
• the sale must be on a cash basis, and the consideration must be
received no later than the time of transfer of assets to the SPV.
The sale consideration must be market-based and arrived at in a
transparent manner at an arm’s-length basis; and
• the transfer of assets from originator must not contravene the
terms and conditions of any underlying agreement governing the
assets, and all necessary consents from obligors (including from
third parties, where necessary) must have been obtained.

30 Getting the Deal Through – Structured Finance & Securitisation 2017

© Law Business Research 2017

Getting the Deal Through

Acquisition Finance Equity Derivatives Pharmaceutical Antitrust

Advertising & Marketing Executive Compensation & Employee Benefits Ports & Terminals
Agribusiness Financial Services Litigation Private Antitrust Litigation
Air Transport Fintech Private Banking & Wealth Management
Anti-Corruption Regulation Foreign Investment Review Private Client
Anti-Money Laundering Franchise Private Equity
Arbitration Fund Management Product Liability
Asset Recovery Gas Regulation Product Recall
Automotive Government Investigations Project Finance
Aviation Finance & Leasing Healthcare Enforcement & Litigation Public-Private Partnerships
Banking Regulation High-Yield Debt Public Procurement
Cartel Regulation Initial Public Offerings Real Estate
Class Actions Insurance & Reinsurance Restructuring & Insolvency
Commercial Contracts Insurance Litigation Right of Publicity
Construction Intellectual Property & Antitrust Securities Finance
Copyright Investment Treaty Arbitration Securities Litigation
Corporate Governance Islamic Finance & Markets Shareholder Activism & Engagement
Corporate Immigration Labour & Employment Ship Finance
Cybersecurity Legal Privilege & Professional Secrecy Shipbuilding
Data Protection & Privacy Licensing Shipping
Debt Capital Markets Life Sciences State Aid
Dispute Resolution Loans & Secured Financing Structured Finance & Securitisation
Distribution & Agency Mediation Tax Controversy
Domains & Domain Names Merger Control Tax on Inbound Investment
Dominance Mergers & Acquisitions Telecoms & Media
e-Commerce Mining Trade & Customs
Electricity Regulation Oil Regulation Trademarks
Energy Disputes Outsourcing Transfer Pricing
Enforcement of Foreign Judgments Patents Vertical Agreements
Environment & Climate Regulation Pensions & Retirement Plans

Also available digitally

Online
www.gettingthedealthrough.com

Structured Finance Official Partner of the Latin American Strategic Research Sponsor of the
& Securitisation Corporate Counsel Association ABA Section of International Law
ISSN 2058-5594
© Law Business Research 2017