Common use of Single Purpose Entity Provisions Clause in Contracts

Single Purpose Entity Provisions. It is a requirement that the borrower be a bankruptcy remote, special purpose entity. A bankruptcy remote, special purpose entity is an entity which is unlikely to become insolvent as a result of its own activities and which is adequately insulated from the consequences of any other party’s insolvency. Set forth below is language to be included in the organizational documents of corporations, limited partnerships and limited liability companies to evidence such entities’ existence as bankruptcy remote, special purpose entities.