A Special Purpose Vehicle, also known as a Special Purpose Entity, is a subsidiary set up by the parent firm to protect itself from financial risk.
This subsidiary is a legal entity in its own right, with its own financial statements.
Bankruptcy Remote Entity is another name for SPV. The SPV will not have any bankruptcy responsibilities towards itself if the parent business goes bankrupt.
It can be used to take on a risky venture while minimising the financial impact on the parent firm and its investors.
Isolation from bankruptcy, financial risk mitigation, convenience of conducting business, and capital raising are just a few of the advantages of SPVs.
Before investing, investors should examine the financials of parent firms and SPVs.
Information provided on this website is for Educational & Informational purposes only and is not considered to be advice or recommendation of any kind whatsoever. Anyone who wishes to apply the concept & ideas contained in this shall take full responsibility. Readers should always do their own diligence on any information perceived from this site to form their own opinion and best judgments. Any action you take upon the information you find on this website (letsthinkwise.com), is strictly at your own risk.