Law360, New York ( February 25, 2015, 10:41 AM EST) -- A bankruptcy-remote entity is a special-purpose vehicle (or special-purpose entity) that is formed to hold a defined group of assets and to protect them from being administered as property of a bankruptcy estate. See Paloian v. LaSalle Bank National Association (In re Doctors Hospital of Hyde Park Inc.), 507 B.R. 558, 701, 702 (N.D. Ill. 2013). Bankruptcy-remote entities are intended to separate the credit quality of assets upon which financing is based from the credit and bankruptcy risks of the entities involved in the financing. See id. However, "bankruptcy-remote" does not necessarily mean "bankruptcy-proof." Lenders should recognize the bankruptcy risks that cannot be eliminated, even if the borrower is a bankruptcy-remote entity....
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