Spanish translation: confusión de obligaciones/responsabilidades
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English to Spanish translations [PRO] Bus/Financial - Business/Commerce (general)
English term or phrase:liability bleed
Administratively, each class of an umbrella fund is treated as a separate fund. Because each class is
created by an allocation of a single corporation’s equity, it is possible for one class to be liable for the
liabilities of another class if the assets of a class are inadequate to satisfy its liabilities. This might occur
with certain investments or investment approaches when an amount greater than capital is at risk.
Common terminology describing this possibility is that the class is not “ring fenced”. In order to address
this potential “liability bleed” between classes, holding companies are established for each class. Each
class will hold a single investment the holding company dedicated to the class. Thus should losses in
excess of the value of the class’s assets accumulate, the holding company will shield the umbrella fund
vehicle from the excess liability.