Special purpose vehicle (SPV)
A legal entity created for a limited purpose. SPVs are used for a number of purposes including the acquisition and/or financing of a project, or the set up of a securitisation (www.practicallaw.com/3-107-7233) or a structured investment vehicle (www.practicallaw.com/1-380-3911). They are usually used because they are free from any pre-existing obligations and debts, and are separate to the parties that set them up for accountancy, tax and insolvency purposes.
For more on the use of SPVs in structured finance transactions, see Practice notes, Securitisation: overview: The SPV (www.practicallaw.com/7-202-1177) and Collateralised debt obligations (CDOs): overview: Principal parties: SPV / issuer (www.practicallaw.com/9-385-8080).