Whilst security trusts are our bread and butter, we have recently been using bare trusts in structured transactions to achieve specific aims.
Under a security trust, we typically hold security over the assets of a debt issuer for the creditors of that issuer. Typically, this is needed in a debt programmes or securitisation transanctions and the creditors are usually the parties to the transaction and the noteholders. The security trust avoids the debtor having to grant security to each creditor separately, something that would be costly and impractical, particularly with a fluctuating creditor pool.
A bare trust is used where a specific creditor is to have an immediate and absolute right to the property. The property is held in our name as trustee but we have no discretion over the assets. We are a mere nominee in relation to the assets and the trust documentation will set out the way in which a creditor is able to give us instructions.