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Appendix Six Legal Isolation Requirements

A failure of compliance with any of the six tests included in Table A.1 requires that a financial asset transfer be reported as a secured borrowing with pledge of collateral—otherwise the transfer “imputes fraud conclusively.”

TABLE A.1 Table A.1 Six Legal Isolation Requirements That Must Be Overcome for Sale Treatment

TRUE SALE OPINION AND NON-CONSOLIDATION OPINION

1. An example of the conclusions in an attorney’s opinion for a U.S.-based transferor that provides persuasive evidence, in the absence of contradictory evidence, to support management’s assertion that transferred financial assets are presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, is as follows:

“We believe (or it is our opinion) that in a properly presented and argued case, under all principles of law and equity which may have material application to the parties or the transactions described herein, the transfer of financial assets (“Financial Assets”) would be considered to be a sale (or a true sale) of the Financial Assets and not a transfer thereof for security in respect of a loan and, accordingly:

“(a) The Financial Assets and the proceeds thereof transferred to the Purchaser by the Seller in accordance with the Purchase Agreement would not be deemed to be property of (or be recoverable by) the Seller, ...