Where Independent Directors Add Value: Key Use Cases Across Structured Finance

Throughout this series, we’ve explored the legal, structural, and strategic role of independent directors in maintaining bankruptcy remoteness. Let’s take a practical look at where these directors are most commonly used, and why they matter in those deals.

From commercial real estate to project finance to equipment financing, independent directors are a fixture in a wide range of structured finance transactions. Here's where they add the most value.

1. Commercial Mortgage-Backed Securities (CMBS)

In CMBS deals, bankruptcy-remote entities hold the underlying real estate assets. Lenders and rating agencies require independent directors to ensure the SPE can’t be pulled into bankruptcy with the parent developer or sponsor. Their presence protects investor cash flows and supports higher credit ratings.

2. Asset-Backed Securities (ABS)

These transactions pool receivables (e.g., credit card debt, auto loans) into an SPE that issues securities to investors. Independent directors help separate the performance of the asset pool from the creditworthiness of the originator, reducing risk and improving marketability.

3. Project Finance

In infrastructure or energy project finance, SPEs are used to isolate the project’s cash flows from the parent sponsors. Independent directors safeguard the entity against strategic bankruptcy maneuvers during construction delays or financial restructuring.

4. Credit Tenant Lease (CTL) and Equipment Financing

Bankruptcy-remote structures are commonly used in CTL financing or long-term equipment leases. Independent directors ensure legal separation from parent entities, maintaining lender protections throughout the term of the lease or asset’s lifecycle.

5. Private Credit Execution

Private credit lenders increasingly require independent directors, particularly in larger syndicated deals and complex senior / mezzanine structures. With higher leverage levels and looser covenants than traditional bank financing, bankruptcy remoteness becomes critical, especially with the ability to securitize or back leverage loans and additional protections are needed. As private credit competes with broadly syndicated markets, independent directors have become a key differentiator for achieving tighter pricing and attracting institutional co-investors.

The Common Thread: Bankruptcy Risk Isolation

No matter the asset type, independent directors offer one clear advantage: they add a layer of governance that helps isolate bankruptcy risk and maintain structural integrity, even under financial pressure.

How SPE Specialists Supports These Transactions

At SPE Specialists, we provide independent directors who are trained to understand the nuances of these diverse asset classes. Our directors:

1. Bring experience across CMBS, ABS, project finance, and private credit deals

2. Meet rating agency and lender independence criteria

3. Are ready to step in on short notice with full legal and governance support

We ensure your structure is compliant, credible, efficient, and cost-efficient.

Final Thoughts

Independent directors are a strategic component of modern finance. Whether you're structuring your first deal or managing a complex portfolio, make sure your governance is as strong as your collateral.

Looking for a qualified independent director for your next transaction? SPE Specialists is here to help.