SPV and Transaction Parties
Definition
Orphan SPV
An SPV whose equity is held by a professional trustee in a purpose trust (typically Cayman Islands, Jersey, or Ireland), ensuring it is not owned by or consolidated with the originator.
Deep Dives
Related Terms
Special Purpose Vehicle (SPV)
A bankruptcy-remote legal entity created solely to hold assets and issue securities or borrow against those assets. Bankruptcy-remoteness is the defining feature — achieved through limited purpose charter, limited recourse provisions, and non-consolidation opinions.
True Sale
A transfer of assets constituting a legal sale (not a secured loan) so that the assets are excluded from the originator's insolvency estate. Requires: (1) intent of parties; (2) no obligation to repurchase at par; (3) no practical control retained; (4) supported by a true sale legal opinion. See also: VIE/ASC 810 for US GAAP consolidation consequences.