SPECIAL PURPOSE VEHICLES

SMARTNOTESTM (Secured Multi-Asset Return Notes) are innovative structured debt instruments that combine attractive yields with enhanced investor protection. A defining feature of each SMARTNOTETM is that it is secured by pledged collateral held within a Special Purpose Vehicle (SPV) — a legal structure that keeps investor assets bankruptcy-remote from the issuer. This structure isn’t just a legal nuance. It’s a powerful safeguard that helps accredited investors reduce counterparty risk and secure claims over tangible collateral — even in adverse market or credit scenarios.

What “Bankruptcy-Remote” Means for Investors

A Special Purpose Vehicle (SPV) is a legally distinct entity created solely to hold specific assets or obligations. Its independence from the issuer or parent company is what makes it valuable in structured finance. When a SMARTNOTETM is issued through an SPV:

• The collateral is legally owned by the SPV, not by the issuer or any related entity.
• The SPV’s charter prohibits it from taking on outside liabilities or risks.
• If the issuer or its affiliates were ever to face insolvency, the SPV’s assets remain protected from those proceedings.

In effect, the SPV acts as a legal “vault,” holding collateral exclusively for SMARTNote^® investors.

Key Advantages of the SPV Structure

1. Asset Isolation and Security By holding collateral in a separate SPV, SMARTNOTESTM shield investors from the issuer’s general obligations. The pledged assets are clearly segregated, reducing the risk that they could be tied up in unrelated claims. 

2. Counterparty Risk Mitigation Traditional debt instruments expose investors to the creditworthiness of the issuer. With a SMARTNOTETM, the pledged collateral sits in a legally independent SPV, insulating investors from potential financial difficulties at the issuer level. 

3. Clear Legal Claim on Collateral If an issuer experiences financial distress, SMARTNOTETM  holders have a direct, enforceable claim to the collateral. Courts are more likely to recognize the SPV’s assets as outside the issuer’s bankruptcy estate, enabling a faster and cleaner recovery process. 

4. Transparent Structure and Governance The SPV is established with its own governance, accounting, and bank accounts. This separation improves transparency and oversight, giving investors confidence that pledged collateral is properly managed and auditable. 

5. Enhanced Yield Without Compromising Security Because the structure reduces credit risk through collateralization and asset segregation, SMARTNOTESTM  can deliver competitive yields while maintaining prudent investor protection.

Supporting Market Perspectives

Independent analyses support this approach to investor protection:

• Forge Global highlights that SPVs are widely used in private markets to “compartmentalize risk,” ensuring that investors in one vehicle are not exposed to liabilities of the parent or sponsor entity. Read more on Forge Global →
• Roundtable emphasizes that SPVs are expressly designed to be “bankruptcy remote”, protecting assets from both the parent company’s creditors and external disruptions. Read more on Roundtable →

Example: SmartNoteTM Collateral in Practice

A SMARTNOTETM may be backed by a portfolio of real assets — for example, commercial property, income-producing loans, or secured receivables — all held within the SPV. Investors in SMARTNOTESTM hold a first-priority security interest in those assets. If the issuer becomes insolvent, the pledged collateral remains untouched within the SPV. The proceeds from the assets flow directly to SMARTNOTETM investors according to a pre-defined priority waterfall, ensuring a structured and predictable recovery path.

Conclusion

For accredited and high-net-worth investors, the SPV structure behind the SMARTNOTESTM is a meaningful advancement in asset-backed investing. By combining secured, multi-asset exposure with bankruptcy-remote protection, SMARTNOTESTM deliver a blend of yield, transparency, and structural integrity rarely seen in traditional fixed-income offerings. As investor priorities shift toward security, yield, and control, SPV-backed SMARTNOTESTM represent a sophisticated alternative that aligns with institutional-grade standards of risk management and governance.