plenty of people ask me as to what special purpose vehicle/entity - sPV/sPE is.
What special purpose vehicle/entity - sPV/sPE is, is 1. Also referred to as a "bankruptcy-remote entity" whose operations are limited to the acquisition and financing of specific assets. The SPV is usually a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.
2. A subsidiary corporation designed to serve as a counterparty for swaps and other credit sensitive derivative instruments. Also called a "derivatives product company."
Thanks to Enron, SPVs/SPEs are household words. These entities aren't all bad though. They were originally (and still are) used to isolate financial risk.
A corporation can use such a vehicle to finance a large project without putting the entire firm at risk. Problem is, due to accounting loopholes, these vehicles became a way for CFOs to hide debt. Essentially, it looks like the company doesn't have a liability when they really do. As we saw with the Enron bankruptcy, if things go wrong, the results can be devastating.
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(4 posts)-
Posted 1 year ago #
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what foleyadelaide said
Posted 1 year ago # -
someone?
Posted 1 year ago # -
i was warned by all the journals not to even dream of selling GBP till mid- 2009, when the changes in the trade relations will affect the British markets and awaken the industry.
Posted 1 year ago #
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