Limited Recourse and Non-Petition Provisions in UK Securitisation SPVs

A polite “no thank you” to insolvency.

If you’ve read our piece on SPVs (and if not, now’s a good time – here’s the link), you’ll know these vehicles are set up to be the financial equivalent of a silent retreat: quiet, isolated, and very deliberately off grid. Their job is simple – hold assets, issue notes, and stay well away from the insolvency courts.

To help them stick to that brief, securitisations rely on two contractual mainstays: limited recourse and non-petition clauses. They’re not there to make the documents longer (although they certainly help); they’re there to keep the SPV stable, investors protected, and the deal from descending into a free-for-all if things go pear-shaped.

So, what exactly do these clauses do? And how does English law treat them? Let’s look at why they’re so crucial for structured finance.