Standard & Poor's announced changes to its criteria that ensure the bankruptcy remoteness for SPEs incorporated in England and Wales. According to market reports, future S&P-rated transactions will require an independent director be appointed to the board of such SPEs, restricting the company directors' ability to place the SPE into insolvency proceedings.
The requirement will quell S&P's concern that non-independent directors may misguidedly propose administration should a transaction encounter difficulties. "The Enterprise Act 2003 restricted the ability of the trustee to appoint an administrative receiver to block an administration, increasing the focus on the need to avoid administration in the first place," Royal Bank of Scotland analysts said. "We welcome the change in criteria since recent experience (notably Welcome Break) has highlighted some of the shortcomings associated with common directorships between originator/sponsor and SPE issuers."