brainsX

Special Purpose Vehicle/ Entity (SPV or SPE) is a subsidiary separate from the parent company with its own asset/ liability structure. It is mainly used to finance a specific project or asset, and since it’s a seperate entity, its obligations are secured even if the parent company goes bankrupt - thus a credit enhancement from the bank’s perspective.
In the past it was used to hide debts (there is an optional reading on Enron in level 1 text i think) for the parent company to move liabilities off the book. But now i think the accounting standards require the parent company to show consolidated financial statements (Accountants here correct me if i’m wrong).
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