Securitisation 2020 A practical cross-border insight to securitisation work 13th Edition Featuring contributions from: Allen & Overy LLP Macfarlanes LLP Roschier Advokatbyrå AB Brodies LLP Maples Group Schulte Roth & Zabel LLP Cuatrecasas Mayer Brown Shearman & Sterling LLP Freshfields Bruckhaus McMillan LLP Sidley Austin LLP Deringer LLP Nishimura & Asahi VdA GSK Stockmann Oon & Bazul LLP Walder Wyss Ltd. King & Wood Mallesons Orrick, Herrington & Sutcliffe (Europe) Waselius & Wist Loyens & Loeff Luxembourg S.à r.l. LLP ISBN 978-1-83918-046-0 ISSN 1745-7661 Published by 59 Tanner Street London SE1 3PL United Kingdom Securitisation 2020 +44 207 367 0720 [email protected] th www.iclg.com 13 Edition Group Publisher Rory Smith Editor Jane Simmons Senior Editor Contributing Editor: Sam Friend Rupert Wall Head of Production Suzie Levy Sidley Austin LLP Chief Media Officer Fraser Allan CEO Jason Byles Printed by Stephens & George Print Group Cover image www.istockphoto.com ©2020 Global Legal Group Limited. All rights reserved. Unauthorised reproduction by any means, Strategic Partners digital or analogue, in whole or in part, is strictly forbidden. PEFC Certified Disclaimer This product is from sustainably managed forests and controlled sources This publication is for general information purposes only. It does not purport to provide comprehen- PEFC/16-33-254 www.pefc.org sive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. Table of Contents Expert Chapters CLOs and LIBOR Transition 1 Craig Stein & Phillip J. Azzollini, Schulte Roth & Zabel LLP Securitization as an Integral Part of a Corporate Capital Structure 7 Bjorn Bjerke, Shearman & Sterling LLP Credit Fund Warehouse Origination Facilities 14 Richard Fletcher & Ryan Moore, Macfarlanes LLP Securitisation and COVID-19: Issues to Consider 19 Mandeep S. Lotay, Freshfields Bruckhaus Deringer LLP The Securitisation Regulation and Alternative Investment Funds: Friends or Foes? 24 Vassiliyan Zanev & Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l. Cross-Border Trade Receivables Securitisation – Opportunity Awaits 30 Merryn Craske, François-Régis Gonon, Carol Hitselberger & Andreas Lange, Mayer Brown Q&A Chapters Australia Japan 38 King & Wood Mallesons: Anne-Marie Neagle & 178 Nishimura & Asahi: Hajime Ueno & Mioko Fujisawa Ian Edmonds-Wilson Luxembourg Canada 196 GSK Stockmann: Andreas Heinzmann & Katharina 51 McMillan LLP: Don Waters & Michael Burns Schramm Cayman Islands 64 Netherlands Maples Group: Scott Macdonald & James Reeve 212 Freshfields Bruckhaus Deringer LLP: Mandeep S. Lotay & Ivo van Dijk China 75 King & Wood Mallesons: Zhou Jie & Eddie Hu Portugal 228 VdA: Paula Gomes Freire, Benedita Aires & Sebastião England & Wales Nogueira 89 Sidley Austin LLP: Rupert Wall & Tom Hunter Scotland 245 Finland Brodies LLP: Bruce Stephen & Marion MacInnes 108 Waselius & Wist: Maria Lehtimäki & Ville-Veikko Vänttinen Singapore 257 Oon & Bazul LLP: Ting Chi-Yen & Dorothy Loo France 118 Orrick, Herrington & Sutcliffe (Europe) LLP: Spain 272 Hervé Touraine & Olivier Bernard Cuatrecasas: Héctor Bros & Elisenda Baldrís Germany Sweden 292 133 Allen & Overy LLP: Dr. Stefan Henkelmann & Roschier Advokatbyrå AB: Johan Häger & Dan Martin Scharnke Hanqvist Hong Kong Switzerland 303 150 King & Wood Mallesons: Paul McBride & Brian Sung Walder Wyss Ltd.: Lukas Wyss & Maurus Winzap Ireland USA 316 165 Maples Group: Stephen McLoughlin, Callaghan Sidley Austin LLP: T.J. Gordon & Pietro Fontana Kennedy & Lynn Cramer Chapter 16 165 Ireland Ireland Stephen McLoughlin Callaghan Kennedy Maples Group Lynn Cramer 1 Receivables Contracts is to acquire or retain property rights in land or in an existing or projected building, and where the person to whom the credit is provided is a consumer, entered into on or after 21 March 2016 1.1 Formalities. In order to create an enforceable debt and should be taken into account in considering what consumer obligation of the obligor to the seller: (a) is it necessary protections are available to consumers in Ireland. that the sales of goods or services are evidenced by a formal receivables contract; (b) are invoices alone The CCA rules do not limit rates of interest on consumer sufficient; and (c) can a binding contract arise as a result credit, loans or other kinds of receivables. However, it is note- of the behaviour of the parties? worthy that if the cost of credit is considered excessive it may not be enforceable. A “credit institution” (as defined under the CCA) is required to notify the Central Bank of Ireland (the In order to create an enforceable debt obligation of the obligor “CBI”) of any increase in its charges to consumers. The CBI to the seller: has the power to instruct the credit institution to refrain from (a) it is not necessary that the sale of goods or services is imposing the increase in charges. evidenced by a formal receivables contract. An enforce- In Ireland, there is no statutory right to interest on late able debt obligation may be created orally or in writing; payments in consumer transactions. In commercial transac- (b) an invoice alone may operate as sufficient evidence of an tions, a statutory right to interest on late payments does exist. enforceable debt obligation; and Consumers may cancel receivables if the consumer credit agree- (c) the behaviour of parties may be used to determine the ment the receivables were purchased under does not comply with the existence of a contract implied on the basis of dealings CCA Rules. In addition, under The European Union (Consumer between parties. Mortgage Credit Agreements) Regulations 2016 a consumer has a right to discharge fully or partially their obligations under a credit 1.2 Consumer Protections. Do your jurisdiction’s laws: agreement prior to the expiry of that agreement and is entitled to (a) limit rates of interest on consumer credit, loans or a reduction in the total cost of the credit to the consumer (such other kinds of receivables; (b) provide a statutory right reduction consisting of the interest and the costs for the remaining to interest on late payments; (c) permit consumers to duration of the contract). Furthermore, under The European cancel receivables for a specified period of time; or (d) provide other noteworthy rights to consumers with Union (Consumer Mortgage Credit Agreements) Regulations 2016 respect to receivables owing by them? a consumer may be entitled to compensation where justified for possible costs directly linked to the early repayment. Other noteworthy rights of consumers include: The Consumer Credit Act 1995 (as amended) (the “CCA”), (i) Rights against unfair contractual clauses – the European the European Communities (Consumer Credit Agreements) Communities (Unfair Terms in Consumer Contracts) Regulations 2010 (as amended) (the “CCA Regulations”, Regulations 1995. together with the CCA, the “CCA Rules”) and The European (ii) Protections in dealing with regulated entities – the Union (Consumer Mortgage Credit Agreements) Regulations Consumer Protection Code of the CBI. 2016 (which came into operation in Ireland on 21 March 2016) (iii) Protections against unfair commercial practices – the regulate consumer credit agreements in Ireland. Consumer Protection Act 2007. The European Union (Consumer Mortgage Credit Agreements) Regulations 2016 applies to new: (i) credit agree- ments secured by a charge, a mortgage or by another comparable 1.3 Government Receivables. Where the receivables security used in an EEA Member State on residential immovable contract has been entered into with the government or property or secured by a right related to residential immovable a government agency, are there different requirements and laws that apply to the sale or collection of those property, and where the person to whom the credit is provided receivables? is a consumer; and (ii) credit agreements, the purpose of which Securitisation 2020 © Published and reproduced with kind permission by Global Legal Group Ltd, London 166 Ireland As with all governments and government agencies worldwide, the obligor/seller to govern their receivables contract, there is a possibility that sovereign immunity may affect the will a court in your jurisdiction give effect to the enforceability of receivables contracts in Ireland. choice of foreign law? Are there any limitations to the Irish governmental bodies and agencies are subject to the recognition of foreign law (such as public policy or Prompt Payment of Accounts Act 1997. Under the Prompt mandatory principles of law) that would typically apply Payments of Accounts Act 1997, Irish governmental bodies and in commercial relationships such as that between the seller and the obligor under the receivables contract? agencies have a statutory obligation to pay monies due to their suppliers within 45 days of receipt of an invoice or delivery of the goods or services. As discussed above, under Rome I, the parties to a contract may freely choose the applicable law of their contract. Such choice 2 Choice of Law – Receivables Contracts would usually only be overridden if it was contrary to public policy or certain overriding mandatory provisions of law. The principles of Irish common law apply to contracts outside the