The Committee on Securitization and Structured Finance of the Business Law Section of the American Bar Association has prepared this whitepaper to provide a summary analysis of certain fundamental legal concepts underlying “bankruptcy remoteness,” namely: special purpose vehicles, substantive consolidation, and true sale, including the impact of certain recent judicial decisions, in order to provide a framework for assessing the extent to which an entity can be structured to be “bankruptcy remote” without running afoul of federal bankruptcy law. The comments presented in this paper represent the views of the draftspersons and the Committee’s Bankruptcy Remoteness Task Force (the “Task Force”) only and have not been approved by the ABA’s House of Delegates or Board of Governors and, therefore, do not represent the official position of the ABA. Moreover, this whitepaper does not represent the official position of the ABA Section of Business Law, nor does it necessarily reflect the views of all members of the Committee or their respective employers.

Originally published in the Fall 2022 edition of The Business Lawyer (Vol. 77).