- A Special Purpose Vehicle (SPV) is a separate legal entity created by an organization/ legal entity. The SPV is a distinct company with its own assets and liabilities, as well as its own legal status. Usually, they are created for a specific legal/ commercial objective, often which is to isolate financial risk like in the case of Securitisation. As it is a separate legal entity, if the parent company goes bankrupt, the special purpose vehicle can carry its obligations
- A special purpose vehicle can be a “bankruptcy-remote entity” because the operations of the entity are restricted to the purchase and financing of specific assets or projects like Asset Transfer or Sale of Property etc.
- Certain types of assets can be hard to transfer. Thus, a company may create an SPV to own these assets. When they want to transfer the assets, they can simply sell the SPV as part of a mergers and acquisitions (M&A) process.
- ITSL acts as a Trustee for such SPV being floated by a company/entity.