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* A special purpose vehicle/entity is also called a ' bankruptcy- remote entity whose role are limited to the acquisition and financing of specific assets. The SPV is normally a subsidiary company with an asset and liability structure and legal status that makes its obligations secure even when the parent company goes bankrupt.
* The SPV/E are normally used to isolate financial risk.
* An entity can use a special purpose vehicle /entity to finance a large project without putting the entire firm at risk.
* However, the problem is due to accounting loopholes, these vehicles can become a means for Chief financial officers to conceal debit. Normally , it looks like the company do not have a liability when in fact they do. Looking at Enron bankruptcy, if things go wrong, the results can be very bad.
