In the context of structured finance, an opinion letter often furnished as a condition precedent to the closing of a securitization transaction. In the letter, special counsel to the asset-backed securities (ABS) issuer states that in counsel's opinion there would be no reasonable likelihood of substantive consolidation of the assets of the special purpose entity (SPV) acting as issuer or depositor in the transaction with those of the originator(s) or other parent or affiliate of the SPV in the event such parent or affiliate were to become a debtor in bankruptcy.

Nonconsolidation opinions typically cover case law in the area of bankruptcy, piercing the corporate veil, and substantive consolidation. For an example of this opinion, see Standard Document, Substantive Nonconsolidation and True Sale Opinion: Asset-Backed Securities (ABS).

In the context of commercial real estate finance, an opinion letter typically required as a condition precedent to the closing of the loan transaction when the loan is intended to be securitized. The opinion states that in the event of a bankruptcy of a borrower affiliate, there would be no reasonable likelihood of substantive consolidation of the borrower's assets with the affiliate's assets into a single bankruptcy estate (see Practice Note, Legal Opinions: Commercial Real Estate Finance: Nonconsolidation Legal Opinions).