Last Updated March 06, 2019

Law and Practice

Contributed By Homburger

Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

The transfer and sale of assets is typically effected by way of an asset purchase agreement. The agreement usually sets out, among other things, eligibility criteria, the modalities of the transfer (including whether the sale relates to a revolving portfolio) and the perfection requirements. As mentioned in 1.3 Transfer of Financial Assets, perfection requirements depend on the type of assets that are sold to the SPE.

Representations and warranties given by the seller typically relate to the seller itself (due incorporation, consents, compliance with laws, no litigation, absence of insolvency proceedings), to the transaction documents (corporate power, due authorisation, no breach of law, valid and binding obligations) and to the underlying assets (including compliance with seller's standard form of agreements, transferability of assets and compliance with eligibility criteria).

See 1.3 Transfer of Financial Assets.

Covenants of the seller frequently require compliance with relevant laws (data protection laws, confidentiality and similar restrictions), transfer of collections in accordance with the servicing agreement and other transaction documents, provision of all reasonably necessary information in relation to the transferred assets, maintenance of approvals and registrations, earmarking of all transferred assets in the systems of the seller and no further encumbrance or transfer of the relevant assets.

The servicing agreement usually contains provisions relating to the appointment of the servicer, authorisation of the servicer to service the assets on behalf of the SPE, rules on the realisation of collections and on-payment to the issuer, costs and expenses, records and information as well as relevant covenants and servicing standards. An important part of the servicing agreements are the provisions relating to the potential removal of the servicer upon the occurrence of a servicing termination event and appointment of the replacement servicer (see 6.4 Servicers).

Indemnity provisions typically provide that the seller shall hold harmless and indemnify the SPE from and against any damages, losses, claims, liabilities, costs and reasonably documented expenses incurred by the SPE in connection with any breach of obligations on the part of the seller of applicable laws or its obligations under the transaction agreements or relevant representations and warranties and covenants. The indemnity obligation in the servicing agreement usually extends to any failure by the servicer to comply with contractual terms regarding the transfer of collections to the SPE's bank account in due course.

Homburger

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Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

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