Several countries have adopted specific securitization laws, which also define « real selling. » The parties have the right to carry out their activities in any form they wish. There is nothing indecent about obtaining financing by selling assets. While this form of financing may have elements similar to those of a secured loan, it does not convert the sale of assets into a secured loan, provided the transaction is not a note. The real issue of sales is also the basis of accounting accounting, regulatory discharge, etc. Given that a number of facts in Coutinho were consistent with a financing transaction, the decision suggests that Canadian courts have always been reluctant to re-account the sale of capital assets as secured financing when the transaction was considered a sale. After weighing the factors, the Tribunal complied with the form of the contract as an objective reference to the parties` intent. Notwithstanding this approach to Canadian courts, each securitization involves a prudent legal structuring on the basis of the application of the case law to the facts as it stands, generally supported by legal advice. While there is a long body of English jurisprudence on the issue of « real selling » and the resulting risk of re-characterization, the case was decided by the Irish courts only after the recent High Court decision in Bank of Ireland/Eteams (International) Ltd (voluntary liquidation)1. Therefore, the consequences that the transfer is not a real sale could be really catastrophic. Eteams, an Irish company that provides translation services, had entered into a bill-delivery contract with the Bank of Ireland involving the sale of Eteam`s debts to the bank. The company went into liquidation in 2013 and the liquidator wanted the sale of debts to be secured as a loan by a debt charge.
Such a new characterization would have resulted in the bank`s debt being void since it would not have been registered as a commission (as would have been necessary under the Corporations Act in force at the time). Here you will find an interesting series of blogs on the subject: iamfacingforeclosure.com/blog/2007/11/16/true-sale-false-securitizations/ Real sales is also under attack for another reason: the myth of the independence of SPV seems to have exploded, most initiators having taken many measures, including asset buybacks, increased levels of improvement, etc., to prevent their transactions from becoming insolvent. Therefore, the removal of bankruptcies by misappropriation of assets seems to be only a means and not a reality. There are several common law rules that justify a true sale. For example, the judgments of the United States and the United Kingdom – for some of these judgments, see our section on securitization cases. Under no circumstances does the seller transfer to the buyer, as part of a mortgage that the seller has acquired from an affiliate of the seller, unless a True Sale certification has been sent to the buyer prior to the sale. The Irish High Court`s approval of the actual sale and the resulting re-characterization risk provides welcome clarity to banks and alternative lenders that offer financing products to businesses in Ireland, as well as to the structured financial industry in general, and adapts Irish legislation to the English legal situation in this regard. In Exfinco, the English Court of Appeal gave great importance to persons on the face of it and applied a « inconsistent test » that the « label » and language used in the contracts should be respected by the English courts, unless the contractual terms were clearly inconsistent with them or constituted a sham (i.e., a sham).