Special Purpose Vehicle

(redirected from Special Purpose Entities)

Special Purpose Vehicle

A subsidiary of a company that attempts to isolate risk from the parent company by maintaining its assets and liabilities on a completely separate balance sheet. It can be used as a counterparty in swap transactions, or the parent company can finance a project through an SPV that would put the parent company in danger of bankruptcy if the project does not perform well. During the Enron scandal, SPVs developed notoriety because Enron hid much of its debt in SPVs.
References in periodicals archive ?
The newly formed and highly specialized team was put into place to address the growing demand for special purpose entities (SPEs) during an uncertain economy.
It is commonly believed that Enron--all right, Lay and Skilling--failed because of fraud, imaginative accounting, poor oversight and a criminal CFO who overreached himself with a few too many off-balance-sheet special purpose entities.
Both Enron and Parmalat used such arrangements and special purpose entities (SPEs) to conceal the true state of their finances.
The SEC's report on off-balance sheet arrangements, special purpose entities and related issues recommends a rethinking of current guidance on reporting the financial results of leases and defined-benefit pension plans, while pressing for reporting all financial instruments at fair value.
Observation: The use of special purpose entities is becoming more widespread.
FLFC will write insurance guaranty policies for transactions of the new company including the special purpose entities which will fund the proprietary BCLOC Loans originated by the lending unit.
Generally accepted accounting principles require that companies consolidate all entities in which they have a controlling financial interest, including special purpose entities.
These properties are owned by bankruptcy-remote special purpose entities.
While there is nothing illegal per se about such subsidiaries, Enron ran into accounting trouble with several special purpose entities it created to keep debt off its balance sheet.
NCAT also purchases issuer assets from bankruptcy-remote special purpose entities that only sell receivables as to which GMAC has made the representations and warranties or certificates evidencing 100% ownership interest in such receivables.
Earlier today the Securities and Exchange Commission (SEC) issued a staff report Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 On Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers.
The certificates represent beneficial ownership interest in the trust, primary assets of which are notes backed by equity interests in seven special purpose entities and their parents having an aggregate principal balance of approximately $1,900,000,000, as of the cutoff date.

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