There are legal costs associated with the formation of the special-purpose entity
. Dealing with a rating agency and credit enhancement also cost money.
A servicer, often the bank that originated and sold the asset, is contracted by the special-purpose entity
to collect payments on the loans or leases in the pool of assets, to transfer funds to the investors and to foreclose if necessary.
Because of the inherent flexibility in forming and operating a special-purpose entity
, there are several other ownership considerations to address in its formation.
Portfolio lenders often fall short in securitizable loan documentation in the areas of opinions, representations and warranties, junior loans and special-purpose entity
The concept of defeasance of a mortgage arises from the needs of today's mortgage loan securitization industry, where lenders originate mortgage loans to transfer them to a special-purpose entity
that issues bonds backed by the cash flow of the mortgages (a Trust).
If the owner of a special-purpose entity
goes into bankruptcy on unrelated debt, the lenders hope the separate entity will remain separate and not become part of the bankruptcy court's jurisdiction.
The notes will be issued by JIC's offshore special-purpose entity
, Xingsheng (BVI) Company Limited (XSBVI).
TTM Sukuk is a special-purpose entity
formed to issue Islamic bonds with maturities ranging from five to 15 years to meet the funding needs of Trans Thai-Malaysia (Thailand) Ltd, a 50/50 joint venture between Malaysia's national oil company Petroliam Nasional Berhad (Petronas) and Thai peer PTT Public Company (BAK:PTT).
RAK Capital is a Cayman-based special-purpose entity
established for this transaction.
The exchange accommodator will most likely set up a special-purpose entity
(usually an SMLLC) to hold the parked property for the taxpayer until the exchange is complete.
In addition, if a special-purpose entity
has been formed to hold the 1% interest (e.g., an S corporation), its tax returns need to be filed as well.
The notes were issued by China Great Wall's offshore special-purpose entity
, China Great Wall International Holdings III Limited (GWIII).