Glossary of Terms

Bankruptcy Remote 2015-11-10 08:00:00

Bankruptcy Remote

Typically used when discussing a special purpose entity. A bankruptcy remote entity is a separate legal entity whose bankruptcy or insolvency would have a de minimus economic impact on the other entities within the group.

Generally, the bankruptcy remote entity has restrictions placed on it such as, independent-director requirements in the organizational documents in order to reduce the risk that the entity itself will voluntarily file for bankruptcy, be involuntarily forced into bankruptcy as a result of substantive consolidation with an affiliate's bankruptcy, or otherwise be adversely affected by a bankruptcy of its parent or affiliates.

 


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