The Securitisation Law provides that the assets are available exclusively to satisfy the investors’ and creditor’s claims against the securitisation vehicle or an individual compartment in case of the existence of several compartments. Therefore, the operation of Luxembourg law prevents insolvency contamination between different compartments.
From an investors’ perspective, the securitisation vehicle is bankruptcy remote. A bankruptcy remote structure provides reasonable certainty that the financial instruments issued are collateralised by assets that have been isolated legally from the transferor, i.e. the guarantor, in all possible circumstances, including insolvency. Therefore, no recourse can be made by the creditors or liquidator to the securitisation vehicle’s assets.
Recovery of the financial instruments issued depends entirely on the securitisation vehicle’s assets held in the relevant compartment, i.e. that such assets generate sufficient cash-flow when obligations under the issue are due. However, in case of eppf, the investors also have full and direct recourse to the guarantor via the guarantee on first demand.
As eppf is regulated, CSSF may intervene in the same way as with any other financial institution. This may include forced sales, orderly winding down or other measures.