Commingling Risk. The Issuer's ability to make payments in respect of the Notes and to pay its operating and administrative expenses depends on funds being received from the Borrowers into the Collection Accounts and such funds subsequently being swept on a monthly basis by the Servicer to the Issuer's Transaction Account. In case of insolvency of the Seller, the recourse the Issuer would have against the Seller would be an unsecured claim against the insolvent estate of the Seller for collection moneys then standing to the credit of the Collection Accounts at such time. This risk is mitigated by (i) a monthly sweep of the cash representing the collection of moneys received in the related Monthly Collection Period in respect of the SME Loans by the Servicer on behalf of the Issuer from the Collection Accounts to the Transaction Account (meaning that collections will be held in the Collection Account for a maximum period of 2 calendar months and ten (10) calendar days before being swept to the Transaction Account of the Issuer), (ii) an undertaking of the Seller to (at its own discretion) either (a) shorten the maximum period during which amounts will be held in the Collection Accounts before being swept into the Transaction Account to two (2) Business Days or (b) constitute a reserve in a Reserve Account (See Section 5.2.1 –
Commingling Risk. VWFS, as the Servicer, is entitled to commingle Collections with its own funds during each Monthly Period and is required to pay the Collections accumulated to the Distribution Account on the Payment Date at the end of each such Monthly Period. Commingled funds may be used or invested by VWFS at its own risk and for its own benefit during each Monthly Period until each Payment Date. If VWFS were unable to remit those funds or were to become insolvent, losses or delays in distributions to investors may occur. To mitigate any risks associated with this arrangement, the obligations of the Servicer to pay Collections to the Issuer on each Payment Date will be guaranteed by Volkswagen Bank GmbH. If the Guarantor Trigger has occurred, the Servicer is required to pay any Collections standing to the credit of the Collection Accounts to the Distribution Account on the subsequent Business Day and, in addition, either (a) appoint a replacement Guarantor whose long term unsecured debt obligations are rated at least the Guarantor Required Rating within thirty calendar days or (b) advance fifteen days' worth of expected Collections to the Distribution Account every fifteen days. Following any further rating downgrade of the Guarantor to a rating of F3 or below or its equivalent, the Servicer shall, on the first and fifteenth Business Day of each Monthly Period, (i) determine the expected Collections for the relevant fifteen day period following such day of determination and (ii) determine the actual Collections for the relevant fifteen day period preceding such day of determination and, (iii) pay such expected Collections to the Distribution Account on such first and fifteenth Business Day of each Monthly Period (as applicable), taking into account actual Collections received during the preceding period, to eliminate any commingling risk. See "SUMMARY OF THE PRINCIPAL TRANSACTION DOCUMENTS - Servicing Agreement" and "SUMMARY OF THE PRINCIPAL TRANSACTION DOCUMENTS - Guarantee".
