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On Special Purpose Vehicle in AssetBacked Securitization |
Liu Sihai |
Institute of International Laws, Wuhan University, Wuhan 430072, China |
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Abstract The first step of assetbacked securitization is to set up a special purpose vehicle. Only when it is capable of a “bankruptcy remote” and achieves a “true sale” from the originators, can a special purpose vehicle issue assetbacked securities. The “bankruptcy remote” and “true sale” legal system and practice of American and Japanese assetbacked securitization offers a lesson for Chinese companies: theyshould choose reasonable special purpose vehicles, the Chinese government should improve its decisionmaking mechanism and play a leading role during the test stage of assetbacked securitization, and the legislature ought to introduce policies and regulations of “bankruptcy remote” and “true sale”, and finally enact assetbacked securitization laws.
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