Legal Dictionary of Pakistan

Bankruptcy-remote entity

a business, usu. A special-purpose entity, established to perform limited functions and to have one or a few primary creditors. 0 this type of entity is sometimes established to protect lenders on large, complex projects when the lender is to be paid solely or almost exclusively out of the money generated when the project becomes operational. This business is established to have no function other than to develop, own, and operate the project, and to have no principal creditors other than the project lenders. In this way, the lenders have additional protection because there are fewer creditors to compete for the money generated by the project, and there it less likelihood that the project will be forced into bankruptcy. A bankruptcy-remote entity will sometimes issue securities instead of just receiving a direct loan. See single-purpose project; special-purpose entity ; project nancing under financing