The main case related to the characterization of securitization operations is the court decision of the Metropolitan Toronto Police Service and orphan funds against Telus Communications (Widows – Orphans). In the Widows – Orphans case, the Ontario Superior Court found: That the think tanks, when deciding whether a transaction constitutes a genuine sale, have not only considered the form and form of the transaction and the intent of the parties, consist of the fact that Eteams, an Irish company that provides translation services, has entered into a billing contract with the Bank of Ireland involving the sale to the bank of debts that Eteams must repay. The company went into liquidation in 2013 and the liquidator wanted the sale of debts to be secured as a loan by a debt charge. Such a new characterization would have resulted in the bank`s debt being void since it would not have been registered as a commission (as would have been necessary under the Corporations Act in force at the time). Here are the important questions about true selling: the courts should consider the nature of the agreement reached and the rights and obligations imposed on the parties to determine whether, in a given case, the agreement constitutes a genuine sale or guarantee of assets. The content of the agreement will be decisive in this regard and not the form, purpose or economic impact of the agreement. Therefore, the consequences that the transfer is not a real sale could be really catastrophic. In order to give investors unlimited right to securitized assets. True selling is the real line between securitization and the granting of secured credits.
Failure to take risk into account does not convert an asset sale agreement into a secured loan. Providing guarantees or other guarantees to recover the balance of outstanding debts does not change the essential nature of the underlying transaction as a sale and not as a secured loan. The real sale will also be hit hard for another reason: the myth of the independence of VPPs seems to have exploded, with most initiators having taken many measures, including asset buybacks, increased levels of improvement, etc., to prevent their transactions from becoming insolvent. Therefore, the removal of bankruptcies by misappropriation of assets seems to be only a means and not a reality. Given that a number of facts in Coutinho were consistent with a financing transaction, the decision suggests that Canadian courts have always been reluctant to re-account the sale of capital assets as secured financing when the transaction was considered a sale. After weighing the factors, the Tribunal complied with the form of the contract as an objective reference to the parties` intent. Notwithstanding this approach to Canadian courts, each securitization involves a prudent legal structuring on the basis of the application of the case law to the facts as it stands, generally supported by legal advice. Here you will find an interesting series of blogs on the subject: iamfacingforeclosure.com/blog/2007/11/16/true-sale-false-securitizations/ What are the requirements that can be the subject of a real sale? Other factors to be taken into account when selling receivables are: the real issue of sales is also the basis of accounting accounting, regulatory relief, etc. In a recent decision, the High Court of Ireland confirmed for the first time the approach taken by English courts to determine whether a transaction documented as a sale of receivables can be reclassified as a secured loan.